May 08, 2012

Economics & Finance

Chavez cancer fight ignites PDVSA bond rally

Debt traders are pushing up the bonds of state-owned Petróleos de Venezuela, S.A. as they envision a nation without President Hugo Chavez that may free the oil producer from a tax rate as high as 95%. The company’s U$D 26.5 billion of debentures gained 2.1% last week through May 3, the most among the 50 biggest emerging-markets issuers of dollar-denominated debt, building on April returns of 2%, Bank of America Merrill Lynch index data show. The extra yield investors demand to buy debt from the owner of U.S. refiner and marketer Citgo Petroleum Corp. compared with the average for speculative-grade U.S. energy companies has dropped by more than half this year. (Bloomberg, 05-06-2012; http://www.bloomberg.com/news/2012-05-07/chavez-cancer-fight-ignites-pdvsa-bond-rally.html)

Purchasing power in Venezuela is now what it was in 1966

A look into the past reveals that from 1950 to 1978 Venezuela was in a stellar phase in which most families reached unimaginable living standards, but then it all came crushing down, and prolonged decadence began. Statistics compiled by Asdrúbal Baptista and data provided by the Central Bank of Venezuela show that the purchasing power of the average salary of 2011 is the same as in 1966. The 45 years of stagnation are the result of atrophied productivity. (El Universal, 05-05-2012; http://www.eluniversal.com/economia/120505/purchasing-power-in-venezuela-is-the-same-as-back-in-1966)

Venezuela: a country with no rules

In Venezuela, the time needed to register a company, or obtain the document that establishes a person as a property owner may take up to four months, but only if one is lucky. In more complex operations one can wait up to six months, and go through myriad steps, plus the discretionary power of any official. This is not only an issue of efficiency, but has become a system that paralyzes Venezuela's economy and encourages many entrepreneurs to take the route of the informal economy in order to avoid complications. (El Universal, 05-05-2012; http://www.eluniversal.com/nacional-y-politica/120505/venezuela-a-country-with-no-rules)

Venezuela is among the 12 countries included in the priority watch list for Intellectual Property Right (IPR) violations, according to a report of the United States Department of Commerce. The study -which is known as 301 Report- placed Venezuela on the "black list" for one more year. (El Universal, 05-07-2012; http://www.eluniversal.com/economia/120507/venezuela-among-countries-with-high-piracy-levels)

Food shortages at 22%

The general food supply shortage index compiled by DATANALISIS continued at 22% at the close of April. More in Spanish: (Últimas Noticias, 05-07-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/escasez-de-alimentos-se-mantiene-en-22-.aspx)

Commodities

BAUXILUM operating at critical level

CVG BAUXILUM which produces bauxite and alumina has reached an extremely critical operating and financial stage which jeopardizes primary aluminum production and its transformation. The company operates a single phase at 50% of installed capacity. In April it produced 65,000 tons of alumina, out of an average 120,000. That is vital to producing aluminum. Director Wilfredo Flores says "if this situation continues... we are endangering national aluminum production and thousands of jobs". He called upon the Government to review these companies that "are about to shut down". More in Spanish: (El Universal, 05-08-2012; http://www.eluniversal.com/economia/120508/bauxilum-se-encuentra-operando-en-niveles-criticos)

CVG VENALUM has a new president amid operating crisis

Vice President Elias Jaua announced that Francisco Diaz will be the new president in charge of the state company CVG VENALUM aluminum. Díaz will take over a severe operating crisis as the company is operating at 24.4% capacity. More in Spanish: (Tal Cual, 05-07-2012; http://www.talcualdigital.com/index.html; El Universal, 05-08-2012; http://www.eluniversal.com/economia/120508/crisis-operativa-actual-recibe-a-presidente-de-venalum)

International Trade

Colombia-Venezuela cross-border trade faces difficulties

Although the governments of Venezuela and Colombia have signed several agreements, bilateral trade "has failed to take a turn leading to improve the situation that deteriorated after the severance of commercial relations in 2009." In its 2011-2012 report, the Venezuelan-Colombian Chamber for Economic Integration (CAVECOL) says that "except for some cases, difficulties grow day by day" on the border. (El Universal, 05-07-2012; http://www.eluniversal.com/economia/120507/colombia-venezuela-cross-border-trade-faces-difficulties)

Politics

Chavez phones to say he will soon return to campaign,  and "build more socialism" in 2013-2019

He made the statement in a telephone call from Havana to a government radio show in Caracas, adding that he has been working constantly and will use the 2013-2019 to continue "building socialism" and further "empower the Venezuelan people." More in Spanish: (El Universal, 05-08-2012; http://www.eluniversal.com/nacional-y-politica/120508/presidente-dice-que-regresara-pronto-para-incorporarse-a-la-campana; AVN; http://www.avn.info.ve/contenido/chávez-destaca-que-construcción-del-socialismo-se-afinará-periodo-gobierno-2013-2019)

Venezuela insists Chavez still leading as silence reigns

Allies of Venezuela's ailing President Hugo Chavez had insisted he was still leading the nation despite a week of silence from the usually loquacious leader whose battle with cancer has overshadowed his reelection bid. Chavez's normally ubiquitous media presence has slowed to a trickle of Tweets. He had not made any live contact with state media in the week since a public appearance last Monday before leaving for Cuba to receive treatment. (Reuters, 05-07-2012; http://www.reuters.com/article/2012/05/07/us-venezuela-chavez-idUSBRE8460N020120507)

Chavez congratulated France's president-elect Hollande

President Hugo Chavez congratulated François Hollande, who was elected President of France after a second round of the electoral process Sunday. (AVN, 05-07-2012; http://www.avn.info.ve/contenido/chavez-congratulates-france039s-president-elect-hollande)

Venezuela experiences its first mass migration

Information from the World Bank shows that an estimated 521,620 Venezuelans have left the country, and a researcher at Catholic University, Anitza Freites, says migration has increased since 2000. The nation was traditionally a receiver nation. The main destination of Venezuelan migrants is the United States, followed by Spain. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/el-pais-vive-su-primera-migracion-masiva.aspx)

Caricom supports Guyana to Venezuela

The countries of the Caribbean Community described as unfortunate the objection raised by Venezuela to Guyana's request to extend the outer limits of its shelf beyond 200 nautical miles within the UN Commission on the Limits of the Continental Shelf. A meeting of CARICOM foreign ministers held in Suriname on 3 and 4 May reiterated its historical support for Guyana, declaring that there is no territorial dispute between the two countries since boundaries were set in an 1899 Arbitral Award. Caracas has objected to this premise for decades on the grounds that the arbitration decision is null and void. More in Spanish: (El Nacional, 05-07-2012; http://www.el-nacional.com/)




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.

October 04th, 2011

Economics & Finance

Food shortages estimated at 30%, government forced to approve price increases

Luis Vicente León, President of the DATANÁLISIS polling firm, said food shortages exceed 30% in several areas, especially for oil, flour, sugars, etc. Despite efforts to blame the private sector, the Government has had to accept the real cost of producing for milk, corn oil and sunflower oil, and it is now expected price adjustments will be forthcoming. More in Spanish. (Descifrado, 10-03-2011; http://www.descifrado.com/index.php?id=7&no_cache=1&showUid=56493 and Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.html)

Venezuela’s five key trading partners

Imports into Venezuela have increased significantly over the past few years, primarily by the Government. Currently, the five countries sending most supplies to Venezuela are: 1) US. Despite frozen relations, Venezuela bought U$D 4.711 billion from the US during the first semester 2011, according to official numbers. 2) China. Took second place after the political crisis between Venezuela and Colombia; with U$D 1.961 billion, which is 28% more than 2010. 3) Brazil, for U$D 1.406 billion, a figure similar to last year. 4) Spain. Rose by six places on the list, for U$D 1.076 billion, which triples the amount for last year. 5) México, for U$D 723 million, a 10% increase over last year. More in Spanish: (El Mundo, 10-04-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/los-cinco-paises-que-mas-mercancias-le-venden-a-ve.aspx)

Food Minister Carlos Osorio denies a drop in agricultural production, and claims sustainable development policies have increased product distribution capacity nationwide by over 60%. (Veneconomy, 10-03-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27874&idc=3)

Commodities

Venezuela to invest U$D 45 billion to build, maintain refineries

State-owned Petroleos de Venezuela SA says it will invest U$D 45 billion this decade to maintain its domestic refinery network in the country and build other crude-processing facilities. The director of PDVSA’s Paraguana complex, Jesus Luongo, made the announcement, saying the plan will also require the construction of adjacent “social infrastructure” to avoid creating “areas of poverty surrounding the oil installations.” In planning projects of this magnitude, “thought is given not only to oil infrastructure but also to the most important thing: people.” (Latin American Herald Tribune, 09-30-2011; http://www.laht.com/article.asp?ArticleId=429004&CategoryId=10717)

Venezuela oil falls below U$D100

Venezuela’s oil for export basket dropped U$D 3.67 a barrel this week, the second such weekly decline in a row and one the Energy and Oil ministry is now blaming on the “euro crisis”. The Venezuelan oil and products export basket fell to U$D 98.79 a barrel in the week of September 26-30, from $102.46 barrel the previous week. In a statement accompanying price information, the oil ministry said: “Concerns surrounding the debt crisis in the euro zone and the performance of the United States economy became the main factors weakening oil prices during this week.” (Latin American Herald Tribune, 09-30-2011; http://www.laht.com/article.asp?ArticleId=428859&CategoryId=10717)

Fuel prices to be stabilized in Dominican Republic due to PETROCARIBE contributions

Francisco Méndez, president of the Dominican Oil Refinery (REFIDOMSA), has proposed that benefits stemming from an additional 20,000 oil barrels per day provided by Venezuela, should be used  to create a fund to stabilize fuel prices. (AVN, 10-03-2011; http://www.avn.info.ve/node/80281)

Bauxite transportation system severely damaged for lack of maintenance

BAUXILUM mining operations at Los Pijiguaos have taken a heavy blow when the motors for the giant conveyor belt that carries extracted bauxite to the El Jobal dock on the Orinoco river collapsed after working intensely without maintenance or spare parts. More in Spanish: (Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.html)

Rising international commodities prompt a review in oil and milk prices

The increase in international agricultural commodity prices has forced the government to review prices for foods such as corn oil, sunflower oil and milk powder. More in Spanish. (El Mundo, 10-03-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/aumento-de-los-commodities-obliga-a-revisar-precio.aspx

PDVSA acquires stake in Argentine service stations

State-run oil company Petróleos de Venezuela (PDVSA) purchased the stake held by Uruguay’s state energy company ANCAP within Petrolera del Conosur (PDVSUR), which generates losses and owns a network of service stations in Argentina. The ANCAP stake was valued at U$D 11 million but the Uruguayan company will not receive that amount: It agreed instead that PDVSA alone will assume the financial debt of PDVSUR. (El Universal, 10-03-2011; http://www.eluniversal.com/economia/111003/pdvsa-buys-stake-in-argentine-service-stations)

Politics

Chavez will return to Cuba for medical exams

President Chavez announced he will travel to Cuba in late October for medical exams, hours after dismissing a newspaper report that his health had deteriorated. Speaking by telephone on a state TV late night talk show, he said his condition was improving and that the exams will serve to “analyze the close of this cycle” of treatment; he added that he would not disclose the type of cancer he had because doing so would feed “people’s morbid curiosity” about his health. (Bloomberg Businessweek, 09-30-2011; http://www.businessweek.com/news/2011-09-30/venezuela-s-chavez-will-return-to-cuba-for-medical-exams.html)

Belarus delegate in Caracas

Viktor Sheirman, Assistant to the president of Belarus Republic for Special Affairs, was welcomed at the Miraflores Presidential Palace President Hugo Chavez. His Sheiman’s visit aims at evaluating the bilateral agenda, which includes a project to construct 20 thousand homes in Venezuela, within the Grand Housing Mission Venezuela. It is also expected to create tractor factory and construction machinery. (AVN, 10-03-2011; http://www.avn.info.ve/node/80319)

Colombia, Venezuela Foreign Ministers to meet

Venezuela’s Foreign Minister Nicolás Maduro and his Colombian counterpart María Ángela Holguín are scheduled to meet in Bogotá 19- 20 October, ahead of a mid November meeting scheduled for Presidents Juan Manuel Santos and Hugo Chávez. More in Spanish: (AVN; http://www.avn.info.ve/node/80427)

Venezuela, Guyana agree to negotiate maritime border

Diplomatic envoys of Venezuela and Guyana have signed a joint declaration stating their intent to “negotiate the delimitation of maritime boundaries between the two States.” According to official sources, a joint statement “was signed on Friday in Port of Spain, Republic of Trinidad and Tobago, as the two ministers reviewed “several matters of mutual interest.” The document highlights say that “several issues of mutual interest, including Good Offices,” were reviewed. (El Universal, 10-01-2011; http://www.eluniversal.com/nacional-y-politica/111001/venezuela-guyana-reach-agreement-to-negotiate-maritime-border)

All that’s gold doesn’t glitter

What do Hugo Chavez and Glenn Beck have in common? The socialist/populist president of Venezuela and the right-wing talk show host often have strange ideas – just not the same ones. But it turns out, they are both gold bugs.

Now, many people have been investing in gold. But Hugo Chavez wants to horde it literally, physically. The Venezuelan government controls the world’s 15^th largest stockpile of gold: about 365 tons. But, like most gold investors, it doesn’t really have that gold. At least not physically. More than half of Venezuela’s reserves are held overseas in London, New York and Zurich. If you ever visit the New York federal reserve, you can even see it in the underground vaults, neatly labeled as Venezuela’s. (CNN, 10-03-2011; http://globalpublicsquare.blogs.cnn.com/2011/10/03/why-gold-might-be-a-bad-investment/?iref=allsearch)

BANESCO-USA starting operations in Puerto Rico

BANESCO USA, a Florida based company that is a part of the Venezuelan BANESCO group has begun commercial operations in Puerto Rico. Juan Carlos Escotet, head of the BANESCO Multinational Financial Group says “We are convinced that this is the best time to start operations here”. More in Spanish: (Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.html)

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.