Venezuela's Chavez: On Road To Socialism?
Venezuelan stocks plunge 10% today after Hugo Chavez speech. Chavez is president of Venezuela--and in a televised speech last night in Caracas (he was just elected to a third term) he said he wanted his country to nationalize power and telecom companies. U.S. firms are major invstors in Venezuelan oil--and these new efforts in telecom by Chavez will also have affect on American companies beyond energy. On "Morning Call" CNBC's Michelle Caruso-Cabrera went over who's "hurt" but all this.
There are two American companies immediately affected. First--Verizon . They are invested in the Venezuelan company--C.A. Nacional Telefonos de Venezuela, known as CANTV--the firm Chavez wants to nationalize--and the country's largest publicly traded company. Verizon has 25% of that firm and has been trying to sell it to a Mexican company-before yesterday's speech by Chavez.
The other U.S. company affected is AES --based in Virginia. They own 86% of Electricidad de Caracas--the electrical power firm Chavez wants to nationalize.
But it could even get "worse" for American oil companies. In that same speech--Chavez said he wants to nationalize a part of Venezuela's oil production in an area that produces some 600,000 barrels a day. (The country produces a total of 2.55 billion barrels a day).
Chavez starts a new six year term. Here's a direct quote from what he said last night: "We're moving toward a socialist republic of Venezuela, and that requires a deep reform of our national constitution,, we're heading toward socialism, and nothing and no one can prevent it."
FYI: The U.S. is the largest buyer of Venezuelan oil.