Wednesday, January 17, 2007

Easy come, easy go 

Since President Chavez's announcement on nationalizing CANTV and some electric companies the Caracas stock exchange has been having a rough time. In fact, it is now down 32% in the past week and a half.

Now before you go crying a river over the poor investors in Venezuela (as a silly Wall Street Journal editorial did today) you might want to consider this: 2006 was the best year in the history of the Caracas stock exhange with it going up 100%. This is on top of significant gains made in 2004 and 2005.

The Caracas stock exhange, as one would expect, has a small capitalization. It is mainly limited to the small community of Venezuelan investors (the most widely held Venezuelan stock, CANTV, only has 54,000 Venezuelan shareholders) and those foreign investors who like to play the high stakes game of investing in Third World stock exchanges. Small exhanges are known for their volitility, if nothing else. So everyone with money parked there is well aware of the risks. And unless they were late to the party they are still well ahead of the game. So no-one neeed cry for them.


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