An Expert’s View of the Stock Market in Venezuela

Victor flores oic

It is world wide known that the once “rich” country of Venezuela is now crossing an economic change, or most commonly seen by many as an economic crisis. With the declining oil prices that occur several times on the same year, the inflation being the highest in the world and an enormous debt to allied countries. What can you expect of the nation’s stock market? The ex-president of the BVC Victor Flores gives us a detailed and interesting view of how the stock market is currently functioning in the country of Venezuela.

Victor Julio Flores Rojas started his early education in the Armando Zuluaga elementary school. Five years later he finished graduating and obtaining the Bachelor Science title in Rafael Urdaneta high school in the city of Caracas. During the primary education he found out an inclination for both the subjects of math and social studies. When finishing high school, he started getting a lot of interest in how enterprises work, mostly the financial area, and it started being very obvious that he had to study economy. He started the economy career in the “Universidad Central de Venezuela” for three years, and ended the last two in the “Universidad Catolica Andres Bello”. After 5 years of superior studies in the two most prestigious universities of Venezuela, he finally obtained the economics graduate degree. Then a specialization on business administration was done also in Venezuela.

During his university years, Flores started working for the broker Andre Brunet and years later moved to Cavelba Stock House as an operations executive. These two works were just to start gaining experience in the stock market. Both were the backbone for his entrance to the BVC (Caracas Stock Market).

During the interview Mr. Flores started talking of how the situation of the stock market in Venezuela has changed over the years. He mentioned a market law that was applied on 2010 which regulates the behavior and the ways to operate, so there has been a process of adaptation to these rules since then, “these changes have ended in a new structure and size of the market” he said. With the reforms done the BVC has dropped from 63 to 45 members, in which just a 37% of these 45 members is still operating on this market.

Currently there are 37 companies of different economic sectors. Agriculture, Banking, Transport, Communications, Electricity and other services. These are all inside the companies that represent different economic sectors.

After talking of how the stock market has changed over the years, then he talked of how much money is being handled. If there has been a decrease in the past years, or if it has grown during time and something very interest came up during the interview.

When thinking of how Venezuela’s economic situation has only gotten worse no one could expect less for the stock market in the country, but as it turns out there has been a great increase of the money being handled.

On 2013 the volumes of negotiations achieved 1,206 Million Bolivares Fuertes (Bolivar Fuerte is Venezuela’s currency), this was more than 100% when compared to 2012. For 2014 the total was of 8,782 Million Bolivares Fuertes, this number being 628% more than the last year. When talking of 2015 that has not finished yet, they are expecting to end with more than 70% than last year, the number being something close to the 20,000 Million.

Because of the increase in the volumes of negotiations, the price of stocks has also increased enormously. The general index for the stock market has shown that the prices have increased from 471.44 points on 2012, to 11,064.37 for 2015.

To end the interview, we talked if Venezuela’s stock market has an impact all over Latin America.  His response to this was that each country has an economy that differs from the other, also governments have different economic policies. The two main markets that can influence other countries in South America are Brazil and Mexico. MILA (Mercado integrado latinoamericano) is a Latin American market that incorporated Mexico in 2014, in which every country has its own positive influence to this group market.

Finally, he talked about some plans for the future that consist in actualizing their negotiation platform. They are working on that currently and want to install the platform being used in the Spanish market. This platform is more flexible and adapted to the requirements of the globalized world. With this improvement the stock market in Caracas will be internationalized for sure.

By Rodrigo Rivas


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