Stock market awaits anxiously the results of Venezuelan election

For years, debt operators have been confident that if Venezuelan Head of State Hugo Chávez wins the presidential election next October 7, Venezuelan bonds are very likely to fall due to a loss of investors' confidence. On the other hand, under the leadership of opposition candidate Henrique Capriles Radonski, bonds are believed to rise sharply since the leader may fix the imbalances of the Venezuelan economy. Notwithstanding, it is not that easy.

Firstly, the US bond market will not open next Monday. Thus, the volume of the operations will be low.

Stockbrokers explain that the European market opens on Sunday, between two and three in the morning, therefore allowing for the purchase or sale of Venezuelan bonds from the US. The only problem is that by that time, the Venezuelan National Electoral Council may have not announced the results of the Venezuelan presidential elections yet.

If President Chávez is reelected, it is very likely that Venezuelans holding bonds decide to sale some of them, yet foreign investors would not have to do so.

On the contrary, if Capriles pulls off victory with a close margin, political instability and Government imminent actions during the transition period may prevent investors from buying Venezuelan bonds.

Anyway, one thing stockbrokers are sure about is that upon a wide victory of Capriles, Venezuelan bonds will rise substantially.