Economics &
Finance
Washington Post: Chavez’s mysterious
ailment fuels a run on Venezuelan stocks
What is the hottest global market so far in 2012? How
about socialist Venezuela — where stocks rose 99% between Jan. 1 and this week.
That might seem like an improbable surge in a country wracked by double-digit
inflation, shortages of water, power and staple foods, and a dearth of
investment — not to mention one of the world’s highest murder rates. But
Venezuela’s markets are being moved by a strange but powerful force: the
absence of reliable information about the health of President Hugo Chavez — and
the growing speculation that his condition is rapidly deteriorating. According
to Russell M. Dallen Jr., a banker who produces a newsletter on Venezuela, a
rumor that a prominent journalist had tweeted the news of Mr. Chavez’s death
caused Venezuelan bond prices to spike by as much as 5% Friday. (Washington
Post, 04-24-2012; http://www.washingtonpost.com/opinions/chavezs-mysterious-ailment-fuels-a-run-on-venezuelan-stocks/2012/04/24/gIQAWJySfT_story.html)
Barclays: Signs of Chavez
deterioration
BARCLAY's Emerging Markets Research publication for
Monday, April 23 dissects information on the health of President Hugo Chavez,
its political implications and possible effects on the economy. "Venezuela: President signs of impairment"
refers to the recent absence of the Chief of State for over a week which. along
with the shift of forces within the government, "increases the likelihood that Chavez continues to have severe
limitations to continue and finish their campaign to designate a successor."
More in Spanish: (El Universal, 04-25-2012; http://www.eluniversal.com/nacional-y-politica/120425/barclays-signos-del-deterioro-del-presidente-chavez)
World Bank indicates Venezuela squanders oil boom
Rodrigo Chaves, World Bank director for Poverty Reduction
and Economic Management in Latin America and the Caribbean says that whereas
countries like Brazil, Colombia, Peru, Chile and Mexico "have managed well the supercycle"
of raw materials, others "have
squandered the boom, causing permanent damage to their economies." In
his view, should there be a slowdown in China and a fall in raw materials,
"there will be countries that have very high fiscal reserves, such as Peru
and Chile," and others like Venezuela, which have a deficit "will suffer dramatically, because, like
Aesop's grasshopper, they spent the summer singing." More in Spanish:
(El Universal, 04-25-2012; http://www.eluniversal.com/economia/120425/bm-advierte-despilfarro-de-la-bonanza-petrolera-en-venezuela)
CITI forecasts that PDVSA will issue
bonds soon
In a report dated April 24, US banking giant Citigroup
said that it is highly likely that state-run oil company Petróleos de Venezuela
(PDVSA) will issue bonds next month that will be purchased by the Central Bank
of Venezuela (BCV) and other state-run financial institutions. These bonds will
eventually feed the System for Foreign Currency Denominated Securities
Transactions (SITME), a system through which companies buy US
dollar-denominated bonds with bolivars and then resell them abroad to obtain US
dollars. (El
Universal, 04-25-2012; http://www.eluniversal.com/economia/120425/citi-forecasts-that-pdvsa-is-to-issue-bonds-soon)
Venezuela in the last places of
competitiveness in Latin America
Venezuela is ranked second lowest in a study of
competitiveness in Latin America by the Aden 0international business
school..Chile and Panama topped the index every six months. Chile scored 81.4
points out of a maximum of 100 vs. 82.9 the previous measurement (November
2011) and Panama managed 76 points, up from 76.5 the previous semester.
Venezuela is the second lowest in the region with 57.7 points, just ahead of
Bolivia which recorded 54.9 points. More in Spanish: (El Mundo, 04-26-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-en-los-ultimos-lugares-de-competitividad.aspx)
BCV: Retail sales drop 1.37% in
January
Sales remain sluggish despite public spending to boost
consumption in an election year. According to data released by the Central Bank
of Venezuela (BCV), both wholesale and retail sales grew 1.76% in January,
compared to a 3.87% increase in the first month of 2011. Only retail sales
posted a 1.37% decline in the first month of the year. (El Universal, 04-25-2012; http://www.eluniversal.com/economia/120425/bcv-venezuelas-retail-sales-fall-137-in-january)
CADIVI lowers allocation of currency
by 14%
The first quarter of 2012 reflects a drop in allocation
of foreign currency, despite government assurances that the supply of foreign
currency for price-controlled items will improve. An ECONOANALITICA report
shows uneven currency distribution by the currency board, with a decrease of
37% and 39% for the health and automotive sectors; and increases of 64% for
food, and 40% for general trade. More in Spanish: (Tal Cual, 04-27-2012; http://www.talcualdigital.com/index.html)
Minimum wage increase now official
A presidential decree fixed a mandatory 30% monthly
minimum wage increase for workers in the private and public sectors. The
increase is scheduled in two 15% parts, one in May and the other in September. More in Spanish: (Tal Cual, 04-26-2012; http://www.talcualdigital.com/index.html)
Commodities
PDVSA eyes exports to India
As China shows signs of a slowdown in oil and fuel
consumption, PDVSA is looking to India to take up the slack. Dispatches to
India in the first two months of 2012 indicate that shipments to that country
could balance or surpass supplies to China. More in Spanish: (El Nacional,
04-26-2012; http://www.el-nacional.com/)
Japan grants U$D 1 billion in loans
to PDVSA for oil projects
A new financing of 1 billion dollars have been granted by
Japan to the Venezuelan state-oil company PDVSA, through the Japan Bank for
International Cooperation. The agreement
was signed by Venezuela's Petroleum and Mining minister, Rafael Ramirez, and
Japanese Economy, Commerce and Industry minister, Yukio Edano in Tokyo. (AVN, 04-25-2012; http://www.avn.info.ve/node/109534; El Universal, 04-25-2012; http://www.eluniversal.com/economia/120425/pdvsa-secures-usd-1-billion-in-loan-from-japan)
Venezuela resumes nationwide
power-rationing
Venezuelans residing in the central, western, southern
and eastern regions of the country complain through social networks about the
lack of electricity. They assume that partial power outages have been
implemented or power failures are hitting their regions again due to faulty
power distribution and transmission networks. But beyond that, the government
is implementing a nationwide "scheduled
and rotating power rationing plan." (El Universal, 04-25-2012; http://www.eluniversal.com/economia/120425/venezuela-resumes-nationwide-power-rationing-plans)
Venezuela opposes increase in OPEC
output target
Energy minister Rafael Ramirez says OPEC should not raise
production targets when it meets in June. "We are against it, I think there is plenty of oil available in the
market," he responded when asked whether he was in favor of increasing
targets. "We think the oil price
should be at a minimum $100 (a barrel). The reason the price is up now is because
the market is reacting very nervously to the European economic crisis and the
disturbing moves in the Middle East." (Reuters, 04-24-2012; http://www.reuters.com/article/2012/04/24/venezuela-opec-targets-idUSL3E8FO6ID20120424)
Venezuela iron ore output up 6% in
Q1 - paper
Venezuela increased iron ore production by 6% in the
first quarter of 2012 to its highest level in five years, the president of the
country's primary iron producer Ferrominera Orinoco said. Iron ore output rose
to 4.27 million tons in the first three months of this year, compared with 4.03
million tons in the same period of 2011, Radwan Sabbagh said in an interview
published on Tuesday by the state newspaper Correo del Orinoco. (Reuters,
04-24-2012; http://www.reuters.com/article/2012/04/24/venezuela-iron-idUSL2E8FO5QM20120424)
Sugar supply guaranteed
The head of the Venezuelan Foods Corporation Henry Silva emphasized that
as part of the National Sugar Plan there will be no price increase of the food
staple this year that according to it, its current price is far for the whole
of the productive chain. Also, he guaranteed there is enough stock of the
product for the country’s demand. (Veneconomy, 04-25-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30270&idc=3)
International Trade
South Korea plans for U$D 11.14
billion projects in Venezuela
South Korea and Venezuela have signed non-binding
agreements for five heavy industry projects estimated at U$D 11.14 billion.
According to Korea’s Knowledge Economy Ministry an U$D 8.8 billion crude oil
project, involving PDVSA and a group including DAEWOO Engineering &
Construction Co., will build a pipeline linking the Orinoco oil fields in the
Junín area southwest of Caracas the capital to oil storage tanks and a harbor
to be built in the coastal area of Araya. PDVSA and HYUNDAI Engineering &
Construction Co. plan to build a U$D 1 billion, 900-megawatt petroleum
coke-fired power plant in Carabobo, and a U$D 800 million refinery capable of
processing 60,000 barrels a day in Junín. PDVSA will also build a U$D 500
million heavy oil storage facility with SK Engineering & Construction Co.
PEQUIVEN and SK Engineering will construct a U$D 35 million petrochemical plant
with a capacity to produce 800,000 tons of ethylene and other products a year,
the ministry said. (Bloomberg, 04-24-2012; http://www.bloomberg.com/news/2012-04-24/south-korea-says-it-plans-11-14-billion-projects-in-venezuela.html)
Politics
Chavez returns ailing; still ahead
in polls
President Hugo Chávez arrived early on Thursday in
Venezuela, after spending 12 days in Cuba, where he underwent a fourth cycle of
radiotherapy sessions to treat an undisclosed form of cancer. His failure to
make his usual rounds on television and radio sparked speculation that his
health had taken a turn for the worse and that he might have even died. But Chavez’s
health problems don’t seem to be hurting his presidential aspirations. A series
of recent polls show that the 57-year-old leader is still ahead of his rival
Henrique Capriles, even as he’s been running his campaign from a Cuban hospital
ward. “A key to understanding this
phenomenon is that most people don’t think he is very sick,” said John
Magdaleno, with the Polity political consulting firm in Caracas. “They recognize that he’s ill but they
believe he will be able to compete in the race.” (El Universal, 04-26-2012; http://www.eluniversal.com/nacional-y-politica/120426/chavez-arrives-in-venezuela-no-formal-address-delivered; The Miami Herald, http://www.miamiherald.com/2012/04/26/2769833/chavez-returns-to-venezuela-ailing.html#storylink=cpy<9
Prepare scenarios with Chavez,
without him, or a suspension of elections; Chavez calls for unity
At a meeting of the group that issues guidelines for regional
election campaigns, Wilmer Castro, who coordinates the unit for planning and
evaluation presented three scenarios for the next 5 months leading to the October
7th elections: "With a weakened
Chavez, without Chavez, and the suspension of the elections due to the
political climate". Higher PSUV officials later disavowed the
presentation by Castro and ordered cadres to present Chavez in campaign mode
and the opposition plotting violence to suspend the elections. In a telephone
call, Chavez himself called to followers to promote "national unity to
defeat opposition psychological warfare". (El Nacional, 04-25-2012; http://www.el-nacional.com/, More in Spanish: Agencia
Venezolana de Noticias; http://www.avn.info.ve/contenido/chávez-convocó-unidad-nacional-para-derrocar-guerra-psicológica-oposición;
El Universal, http://www.eluniversal.com/nacional-y-politica/120427/chavez-hay-que-construir-la-victoria-todos-los-dias)
Colombia's former President Alvaro
Uribe will campaign along the border against a Chavez reelection, and has called Venezuela a haven
for Colombian terrorists and drug trafficking. More in Spanish: (El Nacional,
04-27-2012; http://www.el-nacional.com/)
US supports OAS sending observers to
Venezuela's elections
Roberta Jacobson, Assistant Secretary of State for the
Western Hemisphere told the Latin America Subcommittee of the House Foreign
Affairs Committee that the US would roundly support the OAS sending observers
to the October Presidential elections in Venezuela, but cautioned that in order
to do so the OAS must receive a request from the Venezuelan Government. More in
Spanish: (El Nacional, 04-27-2012; http://www.el-nacional.com/)
Greater Caracas reported as the
third most violent area in the world
Mexican NGO Citizens Council for Public Safety (CCSP) has published a
report showing the 50 most violent areas in the world during 2011. According to
this report, the Greater Caracas area was the third most violent in the world
with 2215 homicides. This was 105.31 homicides per 100,000 populations. Only
the Cortés and Yoro areas of Honduras are ahead in violence. More in Spanish:
(El Universal, 04-27-2012; http://www.eluniversal.com/sucesos/120427/distrito-capital-es-el-tercero-mas-violento-del-mundo)
The following brief is a synthesis of the news as
reported by a variety of media sources. As such, the views and opinions
expressed do not necessarily reflect those of Duarte Vivas & Asociados and
The Selinger Group.
