The Caracas Stock Market, The “Best” In The World, Is Not As Good As It Seemed

January 3, 2013


Caracas Stock Index during 2012

I keep reading these articles about the Caracas Stock Market being the “best” market in the world in 2012 and I am a little amused by the explanations, which tend to concentrate on the fact that President Chávez was ailing. There is a pretty good article here, but I am quoted in it, so I prefer to give my complete opinion.

Let’s start at the beginning, what is the definition of best?

If best is the market that went up the most, the question is: In what currency? Because if the Caracas Stock Index went up 302%, it did so in Bolivars, the local currency, which is fixed, controlled and established by Government fiat at Bs. 4.3 to the US$.


the unspeakable, illegal, black market rate, which does not exist, actually devalued 50% in 2012, so that in US currency, if you managed to find someone that sold you US dollars, the Venezuelan Stock Market,went up “only” 150%, which brought it from the top performing market in the world, to the top performing market in the world, because the second best was Greece, up only 32%.

But again, the best?

Try to find some shares, without raising the price…

Well, let’s say the best market is the one that is covered by many analysts. How many do cover the Venezuelan Stock Market?

Umm, I think I am the only person left. Yeap! The only person that still writes regularly about the Caracas Stock Market in the world. If I am not, please write to me, we should talk once in a while, we are a pretty lonely hearts club, if you exist (I write a weekly report with market and company news and a monthly report for Veneconomy)

But let’s recall that the Venezuelan Government intervened, trampled over and busted 48 brokers in 2010, turning the market into a less of a market, as the most important players were simply wiped out. Some jailed. By now, only bank brokers actually do most of the tradings. The market has been diminished, minimized.

How much? Well, the stocks that trade in the market have a value of about US$ 7 to 8 billion in an economy worth about US$ 300 billion, that is all the market is worth.

But. How much is traded every day? Well, not much. Because the average daily trading volume was US$ 500 thousand in 2012. Not much. Think about it. If ten clients buy fifty thousand dollars, that is it!

Even worse, only 43 days in the year had a volume of more than half a million dollars. And 136 days had volume of less than US$ 50,000. Yeap! More than half the days of the year had volume of barely US$ 50,000. And all this at the official rate!!! Use the parallel rate and it gets really depressing, divide by four!

In fact, there were many days (about a dozen) in which no stocks traded. Not at all. Not one. In fact, there were 105 days in which less than 10,000 shares traded. An some of them are worth less than one Bolivar. Even worse, there were 24 days in which less than 1,000 shares traded.

So, why did stocks go up so much in 2012?


1) Banks make money hand over fist in Venezuela thanks to revolutionary stupidity or largesse, they pay big dividends. As an example, Banco Provincial had a return on equity of 48% in 2012. It’s dividend grew 35% and for the full year, it paid a 14% dividend. Add the capital gains and the total return on its shares was 213% in a country where a CD pays 10% and inflation closed at 19.9%, if you believe Government figures. (I don’t, they said it would be 20%, funny, a 0.1% error and the third worst inflation in the world) Nice investment if you can get some shares, which is really hard.

2) Since Venezuela has strict foreign exchange controls, there are very few ways to protect the value of your money. You can buy “real assets” like a car, real state or other hard goods. But if you are an insider at any of the companies that trade, you can buy your own stock, which is cheap and most likely pays a good dividend too. In fact, much of  the large volume in the market were large “cross trades” performed by the broker of the bank whose shares were being traded.

3) Of the 16 shares in the Caracas Stock Exchange, three don’t trade. Cemex I and II, because the Chavez Government nationalized the company, paid Cemex for its assets, but left the minority stockholders hanging out to dry (So did Cemex). The shares have not traded since August 2009. Sivensa no longer trades either. The Government nationalized  half of the company in 2010 and the other half recently leaving the company with few assets.

4) You can buy Government owned companies, like CANTV and Banco de Venezuela, in the expectations that if there is change, they will be worth more or even privatized.

5) Investors know that a devaluation is coming, which benefits industrial companies or banks that are allowed 15% of their capital to be in foreign currency. Investors tend to rush to buy first, before this happens. Think Japan the last month, the currency devalues, the stock market goes up.

6) And yes, people did play Chavez’ illness. However, the market went up all year, whether he was fine or not, as shown in the graph above. Note the big spike in October right before the election, as some overly optimistic Venezuelans drove shares up. But also note that it went down, but recovered fast and by the beginning of November it was rising going to all time highs by December 1st.

But in the end, realities are what they are: It is impossible for a foreigner (or almost) to buy local shares. He would have to exchange currency at the official rate and or the black market, Foreign investors simply don’t like that. But even if they could, how much could they invest in a market that does US$ half a million a day?

Not much really, because these statistics are distorted by large cross trades.

So, the Caracas Stock Market is simply an oddity. Only Venezuelans allowed. A weird “market” which is not truly a market and whose movements respond to many weird variables and distortions created by the Chavez administration over the last 14 years.

But it is not the “best” market in the world, just the one that mathematically went up the most in a currency that nobody knows what it is worth.

And given the volumes, it takes very little to move prices.

But do you want a good investment in 2012? If you had bought PDVSA 2022 bond in US$, you would have paid 84% on Jan. 1st 2012. It was up to 117.5% today and you collected 12.75% in interest thanks to the stupid “revolution”. That gives you a total return of 55.41% in 2012 in US$, not in some controlled, trapped currency, called Bolivars. And a liquid bond, not some illiquid stock, quoted in Bolivars.

¡Viva la revolución!

Time to sell? You bet, very soon, very, very soon.

59 Responses to “The Caracas Stock Market, The “Best” In The World, Is Not As Good As It Seemed”

  1. Lamar Says:

    Individuals seeking permanent weight loss should look
    for a holistic approach that involves eating nutritious whole foods, regular moderate exercise,
    unprocessed foods in their most natural state, and foods free of chemicals and foods high in GMOs.
    In addition, h – CG protects your muscle while encouraging your body to release the reserves of fat,
    which increases muscle mass actually through weight training
    and aerobic exercise, while fat loss, resulting in a significant and rapid transformation of the body.
    For example, there is a kind of homeopathy called Oligotherapy which presents
    very little doses of vitamins, minerals, supplements and hormones
    that can be very mighty in nudging the body in the main course
    of health. March 2014 update- Learn healthy ways to lose weight from
    Dr. 2) There is a decline in progesterone and estrogen,
    particularly progesterone.

  2. Thanks for all your initiatives that you have put in this very interesting content.

  3. Hey There. I found your blog the usage of msn. That is an extremely smartly written article.
    I’ll make sure to bookmark it and return to learn more of your helpful info.
    Thanks for the post. I’ll certainly comeback.

  4. erklärfilm Says:

    Having read this I thought it was extremely informative.
    I appreciate you finding the time and energy to put this article together.
    I once again find myself spending a significant amount of time both reading and
    posting comments. But so what, it was still worthwhile!

  5. Micheal Says:

    I love your blog.. very nice colors & theme. Did you make this website yourself or did
    you hire someone to do it for you? Plz answer back as I’m looking to create my own blog and would like to
    find out where u got this from. many thanks

  6. Rather than thinking this other woman has something special
    that you don’t, realize that:. When wealth concentrates at the very top, it
    can inflate unstable bubbles that threaten the economy. Choose a backup option (only i – Tunes purchases or the entire library) and click Next.

  7. Often times we do not even know that our customers are
    unhappy because only 2% will tell you. If there’s an item you aren’t in a hurry to purchase, monitor
    the cash back percentage to get the most bang for your buck.
    Whether a woman needs a new makeup, perfume or any other beauty product, it is available on the shelves of different retail stores.

  8. If you want to get much from this paragraph then you have to apply these strategies to your won webpage.

  9. Sebum is that skin cholesterol that functions to protect the skin from losing excess heat to the environment while keeping adjacent cells well
    nourished to give you a younger look. Suffering from acne can cause embarrassment and more devastating psychological issues
    in some people. Most treatments leave redness on the skin, but these
    formulas leave skin supple and soft because of the botanical extracts contained in the forumla.

  10. Thanks for finally talking about >The Caracas Stock Market, The Best In The World, Is Not As Good As It Seemed | The Devil’s Excrement <Loved it!

  11. Greetings! Very helpful advice within this post!
    It is the little changes that produce the largest changes.

    Thanks for sharing!

  12. Woah! I’m really loving the template/theme of this blog.
    It’s simple, yet effective. A lot of times it’s difficult to get that “perfect balance”
    between superb usability and visual appearance.
    I must say you’ve done a fantastic job with this. Also, the blog loads extremely fast for me on Firefox.

    Superb Blog!

  13. With havin so much written content do you ever run into any problems of plagorism or copyright infringement?
    My website has a lot of exclusive content
    I’ve either authored myself or outsourced but it looks like a
    lot of it is popping it up all over the web without my agreement.

    Do you know any methods to help stop content from being
    ripped off? I’d certainly appreciate it.

  14. Viagra Says:

    Smoking causes formation of plaques in arteries (atherosclerosis) which obstruct the blood flow.
    Fortunately, there are many treatment options, but you
    might have some hard time in figuring out which one is a permanent and safe treatment.
    Some men’s ejaculate contains antibodies to their own sperm.

  15. Usually I don’t read article on blogs, but I would like to say that
    this write-up very compelled me to try and do it! Your writing taste has been amazed me.
    Thanks, very great post.

  16. It’s truly very complex in this full of activity life to listen news on TV, thus I just use world
    wide web for that purpose, and take the newest information.

  17. What’s up to all, the contents present at this web page are genuinely amazing for people
    knowledge, well, keep up the good work fellows.

  18. Hey! This is my first visit to your blog! We are
    a team of volunteers and starting a new initiative in a community in the same niche.

    Your blog provided us useful information to work on. You have done a marvellous job!

  19. I just like the valuable information you supply to your articles.
    I will bookmark your blog and check again here frequently.
    I am somewhat sure I will be told many new stuff proper here!
    Good luck for the next!

  20. Have you ever thought about creating an e-book or guest
    authoring on other websites? I have a blog based upon on the same information you discuss and would really like to have you share some stories/information.
    I know my visitors would enjoy your work. If you’re even remotely interested,
    feel free to shoot me an email.

  21. This design is wicked! You obviously know how to keep a reader amused.

    Between your wit and your videos, I was almost moved to start
    my own blog (well, almost…HaHa!) Wonderful job.

    I really loved what you had to say, and more than that,
    how you presented it. Too cool!

  22. We are a group of volunteers and opening a new scheme in our community.
    Your site provided us with valuable information to work on.
    You’ve done a formidable job and our entire community will be thankful to you.

  23. Wow, fantastic blog layout! How long have you been blogging
    for? you made blogging look easy. The overall look of your website is magnificent, let
    alone the content!

  24. Magnificent beat ! I would like to apprentice while you amend your website,
    how could i subscribe for a blog website? The account aided me a acceptable deal.

    I had been tiny bit acquainted of this your broadcast offered bright clear concept

  25. Thanks for finally writing about >The Caracas
    Stock Market, The Best In The World, Is Not As Good As It Seemed | The Devil’s Excrement <Liked it!

  26. Just desire to say your article is as astounding. The clearness in
    your post is simply nice and i can assume you’re an expert on this subject.
    Well with your permission let me to grab your RSS feed to keep updated with forthcoming post.
    Thanks a million and please continue the enjoyable work.

  27. I every time used to study paragraph in news
    papers but now as I am a user of internet thus from now I am
    using net for articles, thanks to web.

  28. I am sure this piece of writing has touched all the
    internet viewers, its really really good article on building
    up new blog.

  29. I am really impressed with your writing skills as well as with the layout on your weblog.

    Is this a paid theme or did you modify it yourself? Anyway
    keep up the nice quality writing, itཿs rare to see a great blog like this one these days..

  30. Nice weblog here! Additionally your site rather a lot up very fast!
    What host are you using? Can I am getting your
    associate hyperlink on your host? I want my
    website loaded up as quickly as yours lol

  31. 31 Says:

    Heya i’m for the primary time here. I came across this board and I to find It truly useful
    & it helped me out much. I’m hoping to give something again and aid others
    like you aided me.

  32. I believe what you composed was actually very reasonable. However, think on this,
    suppose you were to write a awesome title? I mean, I don’t want to tell you how to run your website, but what if you added
    a title that grabbed folk’s attention? I mean The Caracas Stock Market, The
    Best In The World, Is Not As Good As It Seemed | The Devil’s Excrement is kinda vanilla.
    You could glance at Yahoo’s front page and see how they write post headlines to get viewers
    to click. You might add a video or a pic or two to get
    people interested about what you’ve got to say.
    Just my opinion, it might make your posts a little livelier.

  33. That is really attention-grabbing, You’re an excessively skilled blogger.

    I’ve joined your rss feed and stay up for seeking extra of
    your wonderful post. Also, I have shared your web site in
    my social networks

  34. Convey the ideas you want to express to your readers, make it short, concise and direct to the
    point while maintaining their enthusiasm to read your article.
    I would show them my progress, my mistakes, the amount of time I
    was spending and most important if I would be able
    to make any sort of revenue. Make big money through affiliate network is a recent trend among internet marketer.

  35. Keywords are words and phrases that prospects type into search engines
    such as Google, Yahoo and Bing as they search for the products you offer.
    Companies may choose to end up being represented by those people who are likely to draw in enormous numbers
    of new customers, however in reality any
    kind of advertising and marketing they can acquire, they are going to use, particularly when it is totally free.
    Of course, there are also a number of websites with which individuals can sign
    up claiming one can earn income on an ongoing basis with very little effort through a
    variety of different networking methods, programs and techniques.

  36. Nice post. I learn something new and challenging on sites I stumbleupon on a daily basis.

    It will always be helpful to read through articles from other writers and practice something from other web sites.

  37. It is a convertible car or truck seat with 5 stage harness for babies
    5 to 65 pounds. This way, obtaining objects is extra accessible and hassle-free for you.
    Kansas City International Raceway (KCIR), 8201 S Noland Rd, 64138.

  38. Set up a calendar next to your computer screen, if possible, so
    you can keep track of dates and deadlines. Companies may choose
    to end up being represented by those people who are likely to draw in enormous numbers of new customers, however in reality any kind of advertising and marketing they can acquire, they are going to use,
    particularly when it is totally free. Many people think
    that to make money in affiliate marketing one has to be a wizard or someone with extra brains.

  39. They are using templates and formats that are tried and tested.
    Maybe not because you want to, but because you have to.
    Then you will promote the products through article writing or use of ads to drive traffic to your site
    in hopes someone makes a purchase which in return makes you money.

  40. Convey the ideas you want to express to your readers, make it
    short, concise and direct to the point while
    maintaining their enthusiasm to read your article. You want to send
    as many targeted viewers as you can to your webpages with the idea that they
    will opt in to your list. Well join the crowd because you are not alone my friend.

  41. We absolutely love your blog and find most of your post’s to be exactly I’m looking for.
    Do you offer guest writers to write content for you personally?
    I wouldn’t mind producing a post or elaborating on a lot of the subjects you write
    concerning here. Again, awesome web log!

  42. Greetings! Quick question that’s entirely off topic.
    Do you know how to make your site mobile friendly? My weblog looks weird
    when browsing from my apple iphone. I’m trying to find a template
    or plugin that might be able to correct this problem.

    If you have any suggestions, please share. Thank you!

  43. Hello mates, how is the whole thing, and what you would like to say
    regarding this article, in my view its actually amazing designed for me.

  44. I’d should talk to you here. Which is not one thing I
    do! I quite like reading a post which will make men and women believe.
    Furthermore, thanks a lot enabling me to comment!

  45. What’s up, this weekend is nice in support of me, because this occasion i am reading this enormous informative article
    here at my house.

  46. Thanks a lot for sharing this with all of us you actually understand what you’re speaking about!

    Bookmarked. Kindly additionally seek advice from my
    site =). We can have a hyperlink change contract among us

  47. SEO Says:

    This is a great article. Don’t forget to check out the affordable SEO services. For just $99/month we will optimize your website for 100 SEO Keywords. We are one of the TOP 10 SEO Service providers in Canada, ranked 7th in for the keyword “SEO”. Hope to hear from you soon. SEO

  48. jmo Says:

    I’m not too familiar with the situation in Venezuela but maybe it could be worth looking at Telefonica (TEF:SM). While it isn’t a very clean proxy, around 14% of their earnings come from Venezuela plus they have c.2 billion euros sat in Bolivars. Of course what happens in Spain and Brazil will be a bigger driver of the share price but nevertheless the Venezuelan business is not insignificant to Telefonica and any news either good or bad could have an impact on the share price. This would be increased later this year if they decide to spin out the Latam business ex. Venezuela.

  49. Gordo Says:

    Maybe you can comment on the vast shortages in the face of moderating inflation? Would it be accurate to say that if you can’t buy something at a higher price, it moderates inflation (even though you can’t buy it at the lower price either)?

  50. Gordo Says:

    Maybe you can comment on the vast shortages in the face of moderating inflation? Would it be accurate to say that if you can’t buy something at a higher price, it moderates inflation (although you can’t buy it at the lower price either)?

  51. moctavio Says:

    Is that supposed to be a joke, or another one of your asenine observations.

  52. A. Shaw Says:

    “How many do cover the Venezuelan Stock Market? Umm, I think I am the only person left. Yeap!” Octavio writes.


    Most likely, it was Octavio who said the Venezuelan market was the best in the world.

  53. Ronaldo Says:

    Maduro has the power to appropriate property and likely advised Chavez when to use it. Without protection from this theft, private business in Venezuela will never flourish.

    I would like to invest in framed color photos of Chavez and other knick-knacks with his image. The Chavez adulation market is going to be really strong for at least a week if Chavez has a major funeral. Beware to dump all assets quickly because the Chinese own the copyright on Chavez image and the re-runs of Alo Presidente.

  54. Kepler Says:

    Caracas’ Stock Exchange is still probably better than that of Niamey.
    Now, I go back to what I said: I think they will postpone the adjustment measures much longer than you expect, at least until the end of the year if not later.
    First they will kill a couple of caimans of the golden eggs.
    They will.

  55. Dr. Faustus Says:

    Will there be new Venezuelan bonds issued in 2013, and when?

  56. Alexander Says:

    Well, what can you expect Octavio ?, Giordani destroyed capital markets, because it is the capitalism’ kernel and he wanted to kill it. He replaced all laws which governed it, and substituted them for his “Ley de Valores” so, there would not be any market for private -Venezuelan -stocks, apart of banks and few others, while since all of them are on path of nationalization.

  57. Says:

    Apreciado Miguel…buen analisis..y ojala 2013 sea saludable y en busca de felicidad para ti y los tuyos!
    Amigo carlos eduardo hellmund (siempre recordando a tu jovial papa en banco de venezuela : historia increible que compartimos y que mucho afecto nuestro Pais!)
    Enviado desde mi dispositivo movil BlackBerry® de Digitel.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: