Commentary From the Mile High City

 
"Star of the conservative blogosphere" Denver Post

"The Rocky Mountain Alliance offers the best of what the blogosphere has to offer." -David Harsanyi, Denver Post
 
 contact
Joshua Sharf
PDA
 search

 notify list
to receive email when this site is updated, enter your email address:
 archives
 recent posts
 categories
24 (2 entries)
Anglosphere (1 entries)
Biking (1 entries)
Blogging (35 entries)
Business (173 entries)
CFA (3 entries)
China (5 entries)
Climate Change (3 entries)
Colorado (20 entries)
Denver (12 entries)
Design (4 entries)
Economics (39 entries)
Education (6 entries)
Electoral College (1 entries)
Environmentalism (3 entries)
Europe (0 entries)
Flying (2 entries)
Foreign Affairs (1 entries)
General (89 entries)
Gun Control (2 entries)
Health Care (7 entries)
Higher Ed (7 entries)
History (8 entries)
Home Improvement (1 entries)
Illegal Immigration (35 entries)
Internet (4 entries)
Israel (57 entries)
Jewish (49 entries)
Judicial Nominations (12 entries)
Katrina (0 entries)
Literature (1 entries)
Media (37 entries)
Music (3 entries)
Photoblogging (32 entries)
Politics (152 entries)
Porkbusters (5 entries)
Radio (16 entries)
Religion (1 entries)
Reviews (8 entries)
Robed Masters (4 entries)
Science (1 entries)
Sports (9 entries)
Taxes (2 entries)
Transportation (6 entries)
Unions (1 entries)
War on Terror (180 entries)
 links
 blogs
my other blogs
Three-Letter Monte
Blogcritics.org
PoliticsWest.Com
Newsbusters.org

Rocky Mtn. Alliance
Best Destiny
Daily Blogster
Drunkablog
Exvigilare
Geezerville USA
Mount Virtus
Night Twister
Rocky Mountain Right
Slapstick Politics
The New Conservative
Thinking Right
View from a Height

other blogs
Powerline
One Big Swede
American Thinker
Meryl Yourish
Instapundit
NRO Corner
Little Green Footballs
No Left Turns
A Constrained Vision

business blogs
800CEORead
Accidental Verbosity
Assymetrical Information
BusinessPundit
Carnival of the Capitalists
Catallarchy
Cold Springs Shops
Commodity Trader
Coyote Blog
Different River
EconLog
Everyone's Illusion
Fast Company Blog
Financial Rounds
Footnoted
Freakonomics Blog
ShopFloor.org
Lip-Sticking
Management Craft
Trader Mike
Carnival of the Capitalists Submission

business data
Inst. Supply Mgmt.
St. Louis Fed Economic Data
Nat'l Bureau of Economic Research
Economic Calendar
Stock Charts

colorado blogs
Pirate Ballerina
Pagan Capitalist
Boker Tov, Boulder
Colorado Pols
Jeff Sherman

<-?Colorado BlogRing#->

sites, not blogs
Thinking Rock Press
 help israel
Israel Travel Ministry
Friends of the IDF
Volunteers for Israel
Magen David Adom
CAMERA
 1939 World's Fair
1939: The Lost World of the Fair
The New York World's Fair: 1939-1940
The Last Great Fair by Jeffrey Hart
Iconography of Hope (U.Va.)
Images From the '39 Fair
Tour the 1939 New York Fair
Paleo-Future
Powered by
Movable Type 3.2

« Rather Obscure | Main | 10-K Activism »

The Island of Venezuela

Apparently in imitation of his hero, Hugo Chavez is slowly turning Venezuela into an island, or at least an economic one. Morgan Stanley is seeking consultation of the investment community as to the removal of Venezuela from its Emerging Market Index. Morgan Stanley gives three interrelated reasons for this proposal:


  1. The continued presence of investability restrictions linked to the foreign exchange regime put in place in the country in February 2003,
  2. The lack of liquidity of most of its constituents,
  3. The continued weight decrease of the MSCI Venezuela Index in the MSCI Emerging Markets Index over the last several years.

Point 2, for the Oakland Raiders fans, means that you can't sell if you want to get out, and you can't buy if you want to get in. The Point 3 means that Venezuela's market has collapsed relative to those of other Emerging Markets. It should be obvious, even to Diana DeGette, that (2) is a direct consequence of investment controls, and (3) is an indirect consequence.

How illiquid is Venezuela? Morgan-Stanley uses a measure called the "Annualized Traded Volume Ratio," which means, roughly, the average monthly dollar volume in a stock divided by its market cap at the end of that month. The Venezuelan securities in the index traded at an average of 1.5% ATVR as of February. That means that in a month, a stock only traded about 1.5% of its market cap. By comparison, Latin America traded at 37% ATVR, Argentina at 26%, and Columbia (heh) at 40%.

How poorly has Venezuela performed? Right now, Venezuela accounts for 0.085% (yes, you read that right) of the entire MSCI Emerging Market Index. Two-thirds of that is the national telephone company, the only Venezuelan company able to repatriate its dividends outside the country. It has been worse. At the end of 2005, the number was 0.07%. But don't get too excited.

At the end of 2001, Venezuela accounted for 0.28% of the Index. That's not terrific - it was 6th-worst - but it's better on both absolute and relative terms. Right now, the next-least-important country on the index is Morocco, at 0.22%. Venezuela's current relative value is about half of the last important country in 12/01, Columbia at 0.14%.

The potential removal is more than a sign that the Venezuela should join the Receding Market Index. It's also going to make it harder to attract capital by completely submerging the country's international investment profile.

Bolivia, take note.

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)




  booklist

Power, Faith, and Fantasy


Six Days of War


An Army of Davids


Learning to Read Midrash


Size Matters


Deals From Hell


A War Like No Other


Winning


A Civil War


Supreme Command


The (Mis)Behavior of Markets


The Wisdom of Crowds


Inventing Money


When Genius Failed


Blink: The Power of Thinking Without Thinking


Back in Action : An American Soldier's Story of Courage, Faith and Fortitude


How Would You Move Mt. Fuji?


Good to Great


Built to Last


Financial Fine Print


The Day the Universe Changed


Blog


The Multiple Identities of the Middle-East


The Case for Democracy


A Better War: The Unexamined Victories and Final Tragedy of America's Last Years in Vietnam


The Italians


Zakhor: Jewish History and Jewish Memory


Beyond the Verse: Talmudic Readings and Lectures


Reading Levinas/Reading Talmud