Venezuela's white-hot stock rally in question

March 6, 2013: 3:25 PM ET
chart venezuela stock market
NEW YORK (CNNMoney)

The Venezuelan stock market surged 300% last year, making it the world's best performer. And so far this year, it's gained another 30%.

But all that may come to a halt, or at least a slowdown, following the death of Venezuelan President Hugo Chavez.

"To state the obvious, the political backdrop remain unsettled," said Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman. He urged "caution against investors getting overly bullish on Venezuela after the demise of Chavez."

The Caracas stock exchange has been on a tear ever since the late Chavez first announced his cancer diagnoses in June 2011. As his health deteriorated, Venezuelan stocks kept moving higher.

The biggest advance came early last year, as investors anticipated Chavez would step down from the post he had held since 1999 for cancer treatment. The market got another big boost last fall, as it appeared less and less likely that Chavez would win re-election.

Related: Chavez's death won't spur new Venezuela oil drilling

While Chavez's death is a "game changer in Venezuelan politics and...creates a power vacuum that will be hard to fill," the most likely scenario is that incumbent Vice President Nicolas Maduro will win the upcoming election, giving continuity to Chavez's political movement, said Diego Moya-Ocampos, Latin America analyst at IHS Global Insight.

Which stock is up on Hugo Chavez's death?

The future of the Venezuelan stock market may be up for debate, but one thing is still certain: for foreign investors, the market is essentially "uninvestable," according to Asha Mehta, portfolio manager at Acadian Asset Management, due limited access, low liquidity, a slim number of publicly traded stocks and the government's lack of support for free enterprise.

Join the Conversation
Markets
Sponsored by
Index Last Change % Change
Dow 17,001.22 -38.27 -0.22%
Nasdaq 4,538.55 6.45 0.14%
S&P 500 1,988.40 -3.97 -0.20%
Treasuries 2.40 0.00 0.00%
Data as of 12:15am ET
Company Price Change % Change
Bank of America Corp... 16.13 -0.03 -0.19%
Apple Inc 101.32 0.74 0.74%
Salesforce.com Inc 59.80 4.09 7.34%
General Electric Co 26.15 -0.28 -1.06%
Cisco Systems Inc 24.65 -0.24 -0.96%
Data as of Aug 22
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.28%4.28%
15 yr fixed3.26%3.17%
5/1 ARM3.43%3.51%
30 yr refi4.21%4.17%
15 yr refi3.18%3.10%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com