Venezuela’s Capital Markets and the Challenge of Investing

During their recent episode, Taylor, Carlisle, and Francisco Amador discussed Venezuela’s Capital Markets and the Challenge of Investing. Here’s an excerpt from the episode:

[Francisco] What’s the situation? Yeah, it exists. It trades very little.

I think it’s, so volumes have, have increased obviously, cause you know, interest has increased a lot in the, in the past eight months or so, but there’s still, it’s not, it’s not really open to, to international investors. I mean, I think you could technically go to Venezuela and I don’t know, try to open a bank account somehow and then get access through some broker to the, but it’s not like interactive brokers will, will, will, will offer it. But yeah, there’s like, I think there was like maybe 30, 40 publicly traded companies.

A lot of them are, some of them better known multinationals, the banks, et cetera. But again, it trades very, very little.

[Tobias] Yeah. It’s kind of fascinating. There’s no sort of established capital markets there then for raising substantial amounts of capital or for exiting or anything like that.

[Francisco] Oh no. Yeah. And I think there’s maybe two public companies that have some exposure to Venezuela, but they’re very, it’s very quirky.

One of them has like a legal claim on, on some mining asset. And it’s basically a, I don’t know if it’s actually a company or like a shell that, that holds that, that, that claim. I think that one’s gold, gold reserve.

And then there’s another one that used to be two businesses and one of them had a interest in a, in an oil field, which now is getting spun off or something. So, but, but there’s not really like any way to like cleanly get exposure to, to, to Venezuela markets through public equities.

[Tobias] It sounds like a pretty exciting opportunity. Like you’re at the very beginning of potentially a huge transition from a socialist economy to a, to a capitalist one. The last one that I can think of is like Russia or something like that.

[Jake] Poland or maybe Estonia or something.

[Francisco] I prefer, I prefer the Poland example. I read, I just read, read notice, my friend. And there’s, that’s a great, it’s insane that, that.

[Jake] Hopefully you’re not dealing with all of that. No, no, no.

[Francisco] I can, I didn’t, I, fortunately I can report we’ve, yeah, it’s been nothing like that. Although the early days of that were, were certainly very exciting and, and I hope we get to see some privatisations too, cause those can be exciting. Yeah.

But yeah, it’s super, yeah, it’s, it’s quite a, I think it’s quite a historic time and I’ve been, I’ve also been super, you know, the, the, the more I’ve talked to more and more people that are looking into Venezuela or, or other Venezuelans that live abroad. I think what, what gives me, what makes me most optimistic is I’ve, I’ve been very surprised by the amount of Venezuelans that want to move back. So I, I do think we’re going to see, to, to give you some idea there, there was, so Venezuela has 28 million people, approximately 8 million people left.

There’s estimates even as as 10. So, I mean, you, you could probably see a scenario where 2 million of those come back in like a year or two. And that’s, and that’s basically, you can, you can look at a lot of like historical parallels of, of countries that went through similar situations and then opened up.

And that’s basically, it’s, it’s kind of like 25% of the mass immigration coming, coming back. It’s pretty, it’s pretty normal. Yeah.