Today's Major Market Move - Venezuelan Stock Market Up 36% for the Year

At the beginning of the month we featured the Venezuelan equity market in our daily major market move post. At that time it was the best performer globally in 2011, with gains of 22%. One month later it is still the best performer in the world, and now it's up 36%.


Click on the image for a larger view.Click here for the current version of the table.
One might be inclined to attribute the strong performance of the stock market to the increase in the price of oil. But a quick look at a chart of the Venezuela Stock Mkt Indx vs. WTI Crude Futures in terms of % gains quickly dispels that notion.


Click on the image for a larger view.Click here for the current version of the chart.
WTI is only up about 10% for the year and when one focuses in on the May to July period, it seems like there's actually an inverse relationship. So what is driving the Venezuelan market higher? Since I haven't yet been able to locate a website for digging deeper into individual companies, I don't have a good answer to that question. This trend isn't just limited to 2011; going back to the end of 2007, the market is up 157%.


Click on the image for a larger view.Click here to go to the chart on Bloomberg.
It's possible that the recent upsurge is attributable to Chavez's illness and the possibility of a more free-market oriented government, as this article from the Latin American Herald Tribune hypothesizes.

Venezuela's stocks continued moving up last week as investors continued buying the few shares available as a play on the possibility of political change in the country. The Caracas Stock Index was up 1.4% for the week, closing at 87,207.

But that still fails to explain the +100% of gains that have occurred in the 3 years prior.