(Bloomberg) -- Luiz Inacio Lula da Silva huddled in Sao Paulo with his top advisers as the leftist former Brazilian president sought to pivot his campaign to the northeast of the country and the key state of Sao Paulo after a narrower-than-expected first round vote.
A focus of his meetings with campaign advisers was also on how to broaden his coalition of supporters to include more centrist politicians -- the key grouping up for grabs as he and President Jair Bolsonaro start the clock on another month of campaigning before a runoff vote on Oct. 30.
Lula, as he is widely known, took the most votes on Sunday. But at 48% to 43% for Bolsonaro, he failed to get an outright win, and the margin was closer than most pollsters had forecast. The 76-year-old leader met with campaign advisers Monday afternoon to map out areas in need of improvement and give marching orders.
“We need to close a few agreements, we need to talk with all the people who didn’t vote for us in the first round and who have representation so we can join forces,” Lula told reporters at the end of the meeting.
Brazilian assets outperformed on Monday, with the real gaining as much as 5% against the dollar, as investors bet the former president will be forced to move further toward the center and commit to more market-friendly policies in order to close such agreements.
One priority is to secure the support of Senator Simone Tebet, who came third in the race and has already signaled she may take his side, according to two senior campaign members. On Sunday, she stopped short of announcing her support for Lula, saying she would give leaders of her coalition 48 hours to make a decision on whom to support.
“I won’t be neglectful,” she said. “I have a side and I will speak up at the right moment.”
A key challenge for Lula is the state of Sao Paulo, home to nearly a quarter of the country’s voters, and where he started his political career as a union leader five decades ago. Bolsonaro, 67, won the state by a 7 percentage-point margin, and the rejection of Lula’s Workers’ Party was stronger than his camp had anticipated.
Read More: Brazil Presidential Race Goes to Runoff as Lula Falls Short
Former Sao Paulo Governor Geraldo Alckmin -- Lula’s running mate -- will need to work harder in the state, including garnering the support of agribusiness leaders, the advisers said, asking not to be identified discussing campaign strategy. Nationally, Alckmin will be charged with getting the backing of politicians who have broken with Bolsonaro but also aren’t comfortable associating themselves with the Workers’ Party after a series of corruption scandals rocked its previous governments.
Nightmare Scenario
Bolsonaro’s solid performance across Brazil, including his unexpected inroads in some northeastern states that have traditionally been Lula’s bastion, has brought a cold dose of reality to Lula’s campaign. A sense of frustration pervaded his headquarters on Sunday night when it became clear the former president would finish the race with a lead of little more than 5 percentage points. The worst-case scenario, the people said, would have been an 8 percentage-point lead.
Such a narrow lead may be explained by a migration of some of the supporters of presidential candidate Ciro Gomes toward Bolsonaro, according to the people.
Gomes, a former governor of Ceara state, the second largest in the northeast region, sought to become a viable middle-road alternative to Lula on the left and Bolsonaro on the right, but never reached 10% of voting intention in opinion polls.
As Gomes’s campaign struggled, more of its traditionally left-leaning supporters drifted toward Lula. He reacted by stepping up attacks against the former president, including bringing up past corruption allegations against him.
Read More: Pollsters Fail to Capture Bolsonaro Support Again in Brazil Vote
Gomes came fourth on Sunday with only 3% of the vote, his weakest performance in four presidential runs. Lula’s advisers expect the majority of those votes will now come his way, regardless of whether Gomes decides to back the former president.
Lula will also spend more time campaigning in the northeastern region, particularly his home state Pernambuco, where he didn’t achieve the strong outcome he’d expected. Lula took the state with 65% of the vote versus 30% for Bolsonaro, compared with a forecast of 69% to 23% in an Ipec poll released on the eve of the vote.
(Updates with comment from Lula at the end of the meeting, market reaction in paragraphs 4-5.)
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