Friday, March 2, 2012

Today's Major Market Move: Venezuela Stock Market Index Gains 3.6% in Friday's Session

Back in our February 4th post we discussed how Hugo Chavez's cancer had returned, despite the Venezuelan leader's previous proclamations that the disease was in full remission. At that time Venezuelan equities where already up an eye-watering 88% since the beginning of 2011 and it was by far the best performing equity market over that time frame. Since the announcement that traces of the disease had again been detected, the benchmark Venezuela Stock Market Index has gone completely parabolic.

Most of this euphoria is the result of the belief that Chavez will be replaced by an administration with a pro-business sentiment. No doubt they are also receiving a boost by are rising crude oil prices. The numbers are truly remarkable when considering the recent stock market performance:

Friday 3/2/2012: Up 3.6% (#1)
February 2012: Up 20.4% (#2)
YTD 2012: Up 32.3% (#2)
Since January 2011: Up 135% (#1)
Since January 2010: Up 182% (#2)

Chavez recently underwent a second surgery in Cuba and not surprisingly, the official statement indicated that the surgery went well. So well in fact that the president is now "soaring like a condor". Unofficially, there are reports that the disease may have entered a terminal stage where doctors consider a recovery extremely unlikely. From Reuters via IOL:
Nelson Bocaranda, an anti-Chavez Venezuelan journalist who broke the news of his return to Cuba, and Merval Pereira, a well-known commentator for Brazil's O Globo network, have been quoting medical sources to suggest the Venezuelan leader's situation is much more serious than the official version.

The pair have been heavily criticised by Chavez allies.

In an increasingly vitriolic atmosphere, state TV was crammed with mockery of foreign and opposition media, while anti-Chavez activists have sarcastically dubbed Bocaranda the country's only reliable “information minister”.

Experts say the pathology results from Chavez's operation on Monday may take up to five days, while a normal recuperation period from that type of surgery would be a week to 10 days.

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