Brazil had a monster day on Monday and Morgan Stanley isn't fading it. The LatAm equity strategy team upgraded Brazil to overweight late on Monday. They call it the start of the market's "honeymoon stage" with Flavio Bolsonaro, and they see room for a further 10% in equities and 10% in the real by year-end as risk premia compress.For context, MSCI Brazil gained 12.5% in USD terms on the day. MSCI EM rose 1.6%, Mexico 1.1% and the S&P 500 0.7%. The EWZ Brazil ETF is shown here:The core of the call is less about the election and more about plumbing. MS argues Brazilian investors have been crowded out of stocks for years by record-high real rates. Local allocations to equities sit around 5%, barely above the all-time low of 4.6%. That compares with an 8.5% historical average and a 15% peak. If fiscal consolidation brings rates down, they see a multiyear rotation from debt into equity.The flow math:Brazil's free float is about US$500 billionPotential new demand: US$30-40bn local, US$10-20bn EM, US$30-40bn globalThat's up to US$100bn chasing a US$500bn floatThat's a lot of money for a market trading around 9.5x forward earnings. Booming commodities are also a big tailwind in the commodity-heavy market with rapidly-growing oil production.The broader regional angle is that Brazil's vote follows Chile, Argentina, Peru and Colombia in a shift away from left-wing populism. MS argues that should lower the region's cost of capital and tighten alignment with the US.What could go wrong? MS flags it themselves. The vote still needs to go to a second round. Bolsonaro leadthe first-round poll 47-44% but he's hardly a guarantee and beyond that, fiscal consolidation is described as "a must." Brazil has a long history of markets pricing fiscal discipline before it shows up. Investment/GDP is just 17%, among the lowest in the region, and MS concedes the transition "will likely take years." This article was written by Adam Button at investinglive.com.