Caracas Generale

Factual Questions
1

I watch CNBC regularly and every day they list the world markets and how each world market is doing. The Caracas Generale is consistently up (it was up 8+% just today). The 1-yr return on it is just over 20,000%, while the YTD return is just shy of 2,000%.

Yet, nobody seems to talk about it. I don’t follow lots of investment news, but with returns like this, it seems it would at least warrant a mention somewhere.

So:

  1. Why is it up so much in the last year?

  2. Why aren’t people talking about it? Is there some crazily high level of risk, considering the instability of Venezuela?

Thanks.

2

You’re looking at it in local currency terms. With hyperinflation, even if prospects for local companies are extremely poor, they represent something closer to hard assets, so they appreciate in local currency terms. What you care about is the stock market valued in USD. I can’t find any reliable measure of that, but that will look far less pleasing. It’s not clear where the black market forex rate is, but hyperinflation also means the currency is collapsing in value against hard currencies.

3

Thanks for the quick and straightforward reply. Gracias.

4

There’s also risk - some of those companies’ hard assets could disappear into the government maw… The ruling clique will occasionally deem a company guilty of profiteering and simply take them over. I assume the shareholders get no reimbursement.