What Is the Caracas Stock Exchange (BVC)?
The Caracas Stock Exchange (BVC), one of the smallest stock exchanges in Latin America, is located in the capital city of Venezuela.
Although the United Socialists of Venezuela have been the ruling party since 2010, some private ownership of property and businesses is permitted.
The exchange is known as the Bolsa de Valores de Caracas (BVC) in Spanish.
- The Caracas Stock Exchange, one of Latin America's smallest, lists some 60 stocks issued by Venezuelan companies.
- The IBC Index reflects the value of 11 Venezuelan stocks.
- Trades are priced in bolívar soberano, the national currency of Venezuela.
Understanding the Caracas Stock Exchange (BVC)
The Caracas Stock Exchange lists the stocks of about 60 companies.
The primary gauge of the value of companies traded on the Caracas Stock Exchange is the IBC Index, also referred to as the General Index, which consists of the stocks of 11 companies.
It is a capitalization-weighted index that tracks the value of the most frequently traded companies in Venezuela, including Banco Nacional de Crédito and Banco Provincial.
The Bolivar Soberano
All trading is in the bolívar soberano (VES), which has been the national currency since 2018, having replaced the bolívar fuerte, which had been rendered valueless by hyperinflation. As of July 10, 2021, the exchange rate was 3,256,602 bolívar soberano to one U.S. dollar.
The National Securities Commission is the Venezuelan regulatory body tasked with regulating the listing, sale, and trading of securities in Venezuela.
The trading day for equities at the Caracas Stock Exchange is broken up into three sessions. The pre-opening runs from 8:30 a.m. to 9:00 a.m.; the market session is from 9:00 a.m. to 1:00 p.m, and the post-closing runs from 1:00 p.m. to 1:30 p.m.
Fixed income securities are traded from 8:30 a,m, to 1:00 p,m.
The Caracas Stock Exchange and the Venezuelan Economy
The Caracas Stock Exchange traces its roots to 1805 when the country was still part of the Spanish Empire. That year, Don Bruno Abasolo y Don Fernando Key Muñoz founded a trading house in Caracas that evolved into the exchange that is still in existence today.
The institution known as the Caracas Stock Exchange was first registered in 1947 and consisted of 22 seats.
The Venezuelan economy is highly dependent on oil exports, as energy production contributes significantly to the country's gross domestic product. In fact, the U.S. Council on Foreign Relations terms Venezuela a "petrostate," and analyzes its spiraling economic and humanitarian crisis in those terms.
The oil sector is dominated by Petróleos de Venezuela, the state-owned oil and natural gas company founded in 1976 after the government nationalized the oil industry. The company provides the government of Venezuela with about half of its revenues, and the economic fortunes of most Venezuelans rise and fall based on the price of oil.
This dependence on oil was a key factor in the collapse of Venezuela's economy that began in 2015 with the decline in global oil prices.
The IBC Index declined 99.63% in the first half of 2021.