The stock market in Venezuela is on a roll. The main index on the Caracas Stock Exchange, the IBC extended gains for the second day, up over 15% in intra-day trade on January 7 and touched fresh lifetime highs. The Index saw a massive 50% jump in the previous session on January 6. The gains for the index over the last 5 days are over 80%, and the 1-month return now exceeds 150%.
Key Venezuela Stock Index sees biggest 5-year jump; global crude prices edge lower
This has been one of the biggest jump seen in the equity markets in Venezuela in the last 1 year. A close study of the 5-year chart highlights the near-vertical rise in the stock market in the past few sessions. There are expectations that a change in regime may improve the economic challenges in the country after Maduro’s exit. Meanwhile, in other global asset classes, crude oil prices edged lower as traders remained apprehensive about a potential increase in supply from Venezuela.
The country has been in focus after US captured its former president, Nicolás Maduro over the weekend. Geopolitical uncertainty persisted with US. President Donald Trump announcing plans on Tuesday to refine and sell Venezuelan crude.
Despite having the world’s largest proven crude oil reserves, Venezuela only produces on average about one million barrels day. This has been one of the factors why crude prices have been fairly stable. However, as per recent developments, Caracas and Washington have reached a deal to export up to $2 billion worth of Venezuelan crude to the United States, President Donald Trump said on Tuesday. According to the latest Reuters report, this move is expected to divert supplies from China.
Venezuela’s political future
Though Venezuela’s political future remains uncertain, US President Donald Trump delivered a heavy blow to the country’s opposition by allowing Maduro’s vice president, Delcy Rodríguez, to assume control, as per Reuters. It needs to be mentioned that most opposition leaders are in exile or in prison, and this also includes Nobel Peace Prize winner María Corina Machado.
According to Venezuela’s constitution, an election within 30 days of the existing president becoming “permanently unavailable” to serve is mandatory. The conditions when a President is unavailable include resignation, death, resignation, or removal from office. Though US officials have indicated possibilities of an election, specifics haven’t been discussed yet.
With Inputs from Reuters.