March 08, 2013

Economics & Finance

Sovereign bonds continue down on expectation the Constitution may not be strictly followed

Political uncertainty continues to discourage investors in sovereign bonds. BARCLAY's has lowered Venezuelan bond weight within their portfolio from overweight to neutral as it does not expect bond prices to rise any further due to uncertainties arising from the possibility that the Government will not follow rules established within the Constitution. More in Spanish: (El Universal, 03-08-2013; http://www.eluniversal.com/nacional-y-politica/130308/los-bonos-de-la-republica-continuan-en-tendencia-negativa)

Multinational companies expect no further economic adjustment

International firms believe new presidential elections will be held before the population is hit by inflationary impacts and greater scarcity. HSBC says the worsening economy, growing inflation and scarcity will lead to a quick election which will cut down on opposition campaign time. They foresee no further economic adjustment since the interim government lacks the legitimacy needed in order to apply radical reforms. More in Spanish: (El Nacional, 03-08-2013; http://www.el-nacional.com/economia/Firmas-internacionales-preven-ajustes-economicos_0_149387825.html)

WB does not rule out increased foreign investment in Venezuela

World Bank's Chief Economist Augusto de la Torre says the institution is alert for an orderly transition in Venezuela, and did not rule out the possibility of increased foreign investments in the country.
He said although no one has "a crystal ball" to forecast whether there would be changes, "you cannot rule out that changes in Venezuela will lead to significant room for foreign investment," EFE reported. (El Universal, 03-07-2013; http://www.eluniversal.com/economia/130307/wb-does-not-rule-out-venezuelas-opening-to-foreign-investments)

Social inclusion is Chavez's the economic legacy

Central Bank President Nelson Merentes says social inclusion is the most important legacy of President Hugo Chavez.

He says most significant economic contribution was to include those most in need in government programs, through projects that promote social inclusion in health, housing and education. (AVN, 03-07-2013; http://www.avn.info.ve/contenido/social-inclusion-economic-legacy-left-chavez)

Inflation rises less than expected after devaluation

Venezuelan consumer prices rose less than expected last month as a devaluation of the Bolivar in February failed to have the immediate impact on prices that many analysts had anticipated. Prices rose 1.6% from January, the central bank said today, compared with the 3.2% median estimate of six economists in a Bloomberg survey. The nationwide inflation rate reached 22.8%, the highest in ten months. The government of former President Hugo Chavez, who died March 5 following a two-year battle with cancer, devalued the Bolivar by 32% on Feb. 8. Many stores are still selling imports they bought at the previous exchange rate and haven’t lifted prices to reflect the new rate. Food prices, which account for 37% of the inflation index, climbed 0.4% in February, the central bank said. “The effects of exchange rate adjustments will begin to be felt strongly starting in March, with strong rises in food, clothing and electronic equipment prices,” says Asdrubal Oliveros, director of ECOANALITICA consultancy. “Devaluation effects were largely absent in February statistics.” (Bloomberg, 03-07-2013; http://www.bloomberg.com/news/2013-03-07/venezuela-inflation-rises-less-than-expected-after-devaluation.html)

Quality of life improved in UN index under Chavez

Venezuelans’ quality of life improved at the third-fastest pace worldwide and income inequality narrowed during the presidency of Hugo Chavez, who tapped the world’s biggest oil reserves to aid the poor. Venezuela moved up seven spots to 73 out of 187 countries in the United Nation’s index of human development from 2006 to 2011, a period that covers the latter half of Chavez’s rule, which ended with his death March 5. That progress trails only Cuba and Hong Kong in the index, which is based on life expectancy, health and education levels. (Bloomberg, 03-07-2013; http://www.bloomberg.com/news/2013-03-07/venezuelans-quality-of-life-improved-in-un-index-under-chavez.html)

Commodities

PDVSA says Venezuela oil industry normal after Chavez death

The oil industry was operating normally and no disruption was expected following the death of President Hugo Chavez, state oil company PDVSA said, calling for calm in the nation. The death of the socialist leader is unlikely to have a big impact on Venezuela's oil sector in the short term, with key projects expected to stay on track if his preferred successor wins elections due to be called in the next 30 days. An opposition victory could eventually lead to an increase in foreign investment, but analysts said this could take years to filter through. (Reuters, 03-05-2013; http://www.reuters.com/article/2013/03/06/us-venezuela-chavez-oil-idUSBRE92501420130306)

Logistics & Transport

Venezuelan ports maintain normal operations

The Minister of Popular Power for Water and air transport and President of Bolivarian Ports (Bolipuertos), CA. Elsa Gutierrez Graffe, reports all commercial ports in the country remain normal operations. More in Spanish: (Bolipuertos, 03-06-2013; http://www.bolipuertos.gob.ve/noticia.aspx?id=6888)

Politics

Election Board ready for Presidential elections as of April 14th

Sources within the Elections Board say they will be able to hold elections in order to choose a replacement for President Hugo Chavez, for the 2013-2019 term, from and including Sunday, April 14th. More in Spanish: (El Universal, 03-08-2013; http://www.eluniversal.com/nacional-y-politica/130308/cne-listo-para-presidenciales-a-partir-del-14-de-abril)

Chávez's body will be embalmed

President Hugo Chavez will be seen by his people for seven days. Vice President Nicolas Maduro announced the remains will be placed at the Museum at the location he occupied during the February 4, 1992, coup attempt. "The body will be embalmed Chavez so it can be seen forever in a glass case," he said. More in Spanish: (AVN, 03-07-2013; http://www.avn.info.ve/contenido/pueblo-tributar%C3%A1-para-siempre-ch%C3%A1vez; El Universal, http://www.eluniversal.com/nacional-y-politica/130307/president-chavezs-body-will-be-embalmed)

Chavez lies in state as grieving for Socialist leader builds

Venezuelans are paying their respects to former President Hugo Chavez today; filing past an open casket in a military academy after his body was carried through the streets of Caracas yesterday. Chavez’s body is laying in state in the capital until a funeral tomorrow. Among leaders arriving early and attending a wake last night were Argentina’s Cristina Fernandez de Kirchner and Bolivia’s Evo Morales. “Chavez lives, the fight continues,” officials including Vice President Nicolas Maduro shouted in unison as they walked past the flag-draped casket holding the socialist leader. Maduro, in his first decree as acting president, declared seven days of national mourning, and stores closed across the capital as the shock of Chavez’s March 5 passing after a two- year battle with cancer settles in. He has not yet been sworn in as acting president, and Venezuelan state media is continuing to refer to him as Vice President. (Bloomberg, 03-07-2013; http://www.bloomberg.com/news/2013-03-07/chavez-lies-in-state-as-grieving-for-socialist-leader-builds-2-.html; Veneconomy, 03-06-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=33965&idc=1; http://www.veneconomy.com/site/index.asp?ids=44&idt=33966&idc=1; Reuters, http://www.reuters.com/article/2013/03/07/venezuela-chavez-idUSL1N0BZ5E920130307; The Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=703214&CategoryId=10718; Fox News, http://www.foxnews.com/world/2013/03/06/chavez-hand-picked-successor-takes-command-in-venezuela/)

33 presidents in Venezuela to bid farewell to Chavez

33 heads of state and government are in attendance at the memorial service for, Hugo Chavez, says Foreign Affairs Minister Elias Jaua. (AVN, 03-07-2013; http://www.avn.info.ve/contenido/33-presidents-come-venezuela-bid-farewell-chavez)

Hugo Chavez - socialist showman who transformed Venezuela

Both marked a quasi-religious "return" for the socialist ex-soldier whom supporters loved with messianic fervor - first from a 2002 coup that saw him jailed on a tiny Caribbean island, and then from cancer surgery in Cuba in June 2011.

Chavez died in hospital on Tuesday, finally succumbing to the cancer after four operations in Cuba. His death ended 14 years of charismatic, volatile rule that turned him into a major world figure. Ever the showman, Chavez would jump from theology to jokes and from Marxist rhetoric to baseball metaphors in building an almost cult-like devotion among followers. Throughout his presidency, he projected himself in religious, nationalistic and radical terms as Venezuela's savior, and it largely worked. While his foes reviled him and portrayed him as a boorish dictator, Chavez was hailed by supporters as a champion of the poor and he won four presidential elections. (Reuters, 03-06-2013; http://www.reuters.com/article/2013/03/06/us-venezuela-chavez-obituary-idUSBRE92418X20130306)

Maduro cries, ‘I am Chávez,’ as U.S. seeks policy clues

In the weeks leading up to his mentor’s death, Vice President Nicolás Maduro’s imitations of President Hugo Chávez became ever more apparent. He has taken on many of Mr. Chávez’s vocal patterns and speech rhythms, and has eagerly repeated the slogan “I am Chávez” to crowds of supporters. He has mimicked the president’s favorite themes — belittling the political opposition and warning of mysterious plots to destabilize the country, even implying that the United States was behind Mr. Chávez’s cancer. He has also adopted the president’s clothes, walking beside his coffin in an enormous procession on Wednesday wearing a windbreaker with the national colors of yellow, blue and red, as Mr. Chávez often did. (The New York Times, 03-06-2013; http://www.nytimes.com/2013/03/07/world/americas/a-leaders-cry-in-venezuela-i-am-chavez.html)

U.S. desires better relations with Venezuela

We’ve said from the beginning that we think the best way to move ahead in this relationship is twofold. One is to have conversations on things where I think there may be mutual interest in moving ahead, and there are clearly some areas in which we think that could be possible – counternarcotics, counterterrorism, economic or commercial issues including energy. But the second part of this is – and we’ve always been clear on this as well, I think – that we are going to continue to speak out when we believe there are issues of democratic principle that need to be talked about, that need to be highlighted. (The Latin American Herald Tribune, 03-07-2013; http://www.laht.com/article.asp?ArticleId=703166&CategoryId=10717; CNN, http://edition.cnn.com/2013/03/05/politics/venezuela-chavez-u-s-/index.html?iref=allsearch; Fox News, http://www.foxnews.com/politics/2013/03/06/obama-us-supports-venezuelan-people-as-begin-new-chapter-after-chavez/)

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.