Political Risk Latin America Blog @PolRiskLatam

Venezuela exchanges/asset managers: The living dead

Posted in News and Articles, Political Risk by politicalrisklatam on December 16, 2010

by The Economist Intelligence Unit, December 16th, 2010.

Venezuela’s moribund capital markets are unlikely to revive any time soon.

The headquarters of the Caracas Stock Exchange (CSE) in the upmarket business district of El Rosal are big, imposing and comatose. On one recent day, December 10th, the market handled a grand total of 11 trades worth only US$72,526. Just four stocks changed hands: one fell in price slightly, while three were unchanged.

It was a typical, soporific day at the CSE. Of the 60 companies listed in the exchange, fewer than half see their stocks traded with any frequency. Some shares go months without a trade, making Caracas home to one of the least liquid bourses in the world. It is, in effect, a zombie exchange.

What is unusual about this situation is not the remarkably thin trading volume but that the exchange continues to exist at all. The leftist government of Hugo Chávez has done much to repress a bourse that had some life in it as recently as five years ago. In recent years, the state has taken over all three of the companies that once accounted for the lion’s share of activity at the CSE: steel maker Sivensa, telecom operator CANTV and Electricidad de Caracas, a utilities firm. Once forced to de-list these shares, CSE’s trading volumes went from low to virtually non-existent. (continue reading… )

 

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