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Assassination in Ecuador spurs investor rethink of election
_As Ecuador grapples with the fallout from the shocking assassination of a top presidential contender, investors are weighing how the tragedy will influence the outcome of the upcoming election.

_The killing of Fernando Villavicencio, an anti-graft crusader who was seen as one of the candidates with the best odds of advancing in the presidential race, stands to boost the chances of one of the more conservative challengers against socialist Luisa Gonzalez in the Aug. 20 vote. The possibility led to a jump in the price of Ecuador bonds, which have traded for over a year now at levels that indicate investors believe there’s a high probability of default. The Thursday gains were the biggest since May, and the best in emerging markets on the day.

“This potentially makes a market-friendly candidate more competitive against Gonzalez in the runoff,” said Carlos de Sousa, emerging-markets money manager at Vontobel Asset Management AG in Zurich.

Gonzalez’s center-right competitor Otto Sonnenholzner or Jan Topic, known for his hard-line approach to growing security issues, could pick up votes in the wake of Villavicencio’s murder, de Sousa said. That would in turn increase the chances that there will have to be a run-off vote to decide the winner, an outcome that could work against Gonzalez, a candidate backed by former President Rafael Correa who unnerves investors with her talk of boosting spending on welfare and public works.

Investors are now mulling which candidate is likely to challenge Gonzalez, but uncertainty is still high, said Fernando Losada, managing director at Oppenheimer & Co.

“Some investors may be interpreting that the more moderate candidates have a better chance of performing well in the upcoming elections,” he said. “As the political climate is very rarefied, it is premature to reach such a conclusion. We maintain a cautious view of the credit.”

Ecuador poll tracker:
Poll Tracker: Ecuador's 2023 Presidential Election
In a special electoral cycle marred by violence, voters will choose between Luisa González and Daniel Noboa in the October 15 runoff.

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