In a move with shades of Cuba's Castro, Venezuelan President Hugo Chávez, being sworn in for a second six-year term today, will nationalize at least two industries, telecom and electricity. The news, which broke during afternoon trading in New York yesterday, sent shares of companies with interests in Venezuela sharply lower. Worst affected were Electricidad de Caracas, owned by AES Corp., and C.A. Nacional Telefonos de Venezuela, known as CANTV, the country's largest publicly traded company. AES shares fell more than a percent during composite trading yesterday followed by another 4+% fall after hours, while CANTV tumbled more than 14% before trading was halted at 3 PM. Verizon owns a nearly 30% stake in CANTV. According to political commentator Erik Ekvall in Caracas, "Let's call a spade a spade. This is communism. He's clearly saying the state should own the means of production." Two other industries likely to be affected are Energy and Gold miners. Chávez also suggested he would further expand the state's role in the oil industry, while taking a harder line with major oil firms operating in the country including BP PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips, Total SA and Statoil ASA. In terms of Gold miners, the Toronto Star reported yesterday that shares of Crystallex International Corp. fell 10% - a direct result Chávez's plans and the uncertainty that now placed the company's ability to secure its Las Cristinas mining permit.
• Sources: New York Times, Wall Street Journal, CNN, The Toronto Star
• Related commentary: Crystallex Plunges on Fears Chavez Will Socialize Venezuelan Mining Industry, Crystallex International Corp: Take Your Money and Run, Venezuela...Chavez...Oil and the Impact on Commodity Prices
• Potentially impacted stocks and ETFs: AES Corp. (AES), CANTV (VNT), Crystallex (KRY), BP PLC (BP), Exxon Mobil (XOM), Chevron Corp. (CVX), ConocoPhillips (COP), Total SA (TOT), Statoil ASA (STO)
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