HomeEconomyStock market, an investment and financing option in 2023

Stock market, an investment and financing option in 2023

We spoke with the president of the BVC, Gustavo Pulido, to learn about the work carried out by the Venezuelan stock market. The Stock Exchange closed 2022 with USD $41.722.817 issued in fixed income instruments

The Venezuelan stock market has presented positive results in the last year, despite being still unknown to the majority of the population and despite the coercive measures implemented by the great poles of power against the country.
In the year 2022 this sector of the economy had a growth of 1,216%. During the January-November period, Bs 1.344.685.636 were traded, which is equivalent to more than US $181 million.

"Mechanisms that Venezuela has been creating, activating for economic activity," said the president of the republic, Nicolás Maduro in his presentation of the report and account before the National Assembly.

One of the main players in the Venezuelan stock market, the Caracas Stock Exchange (BVC), an institution with 76 years of operation in the country, ended the year 2022 with a nominal issued amount of USD $41.722.817 in fixed-income instruments ( commercial papers, obligations).

This represents a variation of 164,82% in relation to what was issued and placed during 2021.

According to numbers to which he had access Últimas Noticias It is evident that in this period, instruments in national currency were traded through its technological platform for an amount of Bs 165.316.485, while in 2021 it was Bs51.169.990, which shows a growth of 223,07%.

Regarding the indexed fixed income instruments, they grew by 1.002,36%, after obtaining US$16.842.779 in 2022 in contrast to the US$1.527.884 obtained the previous year.
Another interesting fact is that last year 54 companies issued debt —6 more than in 2021— of which 18 were new companies in the stock market, averaging 1,5 new companies per month in the last 24 months.

The BVC also observed a reactivation of the secondary market in 2022 in fixed income with a total of 26 series in national currency that gave an amount greater than Bs 26 million and a total of 21 indexed series for an amount greater than US$2 million.

The president of this exchange, Gustavo Pulido, explained that this is part of a structured growth plan, which began in 2018, to call on private companies to issue instruments, which has been favorably received by both the Government and the private sector.

More than 74% traded in Bolpriaven was allocated to agri-food production.

"The fact that the business community is looking towards the market, and to the BVC, is important for growth, especially for areas as high-priority as the agribusiness or the pharmaceutical industry that have had significant growth," he added.

The president of the BVC assured that the interesting thing about the stock market is that it works in the long term, and it is a place where financing can be obtained or designed according to the needs of companies.

"Once companies seek this financing through the market, they stay in the market," emphasized Pulido, also highlighting the reliability that this sector provides both for issuers and investors.

Regulated market

In Venezuela, the stock market is regulated by the National Securities Superintendency (Sunaval), and companies that want to participate in it must go through certain verification processes.

They must be endorsed by a risk rating firm and the brokerage firms structure them with a projected cash flow, that is, with estimates of their future numbers.

“The companies that come to the market are productive companies, there are no briefcase companies here. Therefore, the companies that reach the market are shielded ”, he highlighted.
Three other exchanges are authorized by Sunaval to operate in the country: the Bicentennial Public Stock Exchange, created 12 years ago by then-President Hugo Chávez, after the 2010 financial crisis.

Of recent data is the Decentralized Stock Exchange, with two years of existence and the Stock Exchange of Agricultural Products and Inputs (Bolpriaven) created in 1999 but which had a restart of operations from May 2022.

Growth in the agri-food sector

Bolpriaven also had an interesting growth last year, highlighted the Head of State, carrying out 3.115 operations for an amount of 923.341.404 bolivars, equivalent to more than 115 million dollars and with an average monthly nominal growth of 90%.

However, in a press release from Bolpriaven it is ensured that the operations carried out in 2022 were 3.938 under the modality of anticipated physical delivery, for an amount of Bs 1.529.652.169,12 (US$ 156.896.450,73 at the BCV rate). .

More than 74% traded in Bolpriaven was destined for the production of 15 items: pigs, balanced animal feed, wheat, corn, chickens, sugarcane farmer services, transportation services, cocoa, pork, rice, polyethylene packaging, livestock bovine, fishmeal, packaging of pulp for molding and cane molasses.

State companies participate.

Some state companies will also have more activity in this market. Last year the Executive announced the incorporation of these companies with the offer of between 5% and 10% of their shares.

The first was Cantv, making a first issuance of more than one million new shares, which were fully placed. This money, explains Pulido, will serve to leverage projects developed by the company, which will create sources of employment, helping to boost the country's economy.

"The only way for the country to grow is to first encourage investment because that investment creates sources of work and sources of work is the only way for the country to become rich," he said.

Banco de Venezuela is expected to put new shares on the stock market, as announced in 2022. But they would not be the only ones. At the BVC they are waiting for the “jewel in the crown”, companies linked to the hydrocarbons sector, as announced last year by the vice president of the republic, Delcy Rodríguez.

The stock market will continue to grow in 2023.

Startups benefit

The Valorems, instruments created in 2022 by Sunaval aimed exclusively at financing entrepreneurship, are also part of the offer of the different stock exchanges in the country.

Between January and October 2022, 10 ventures belonging to different areas of the economy were negotiated through this instrument, according to the Sunaval website.

The commerce sector was the most benefited by leveraging 7 ventures, while the other three belong to the industrial, agro-industrial and technology areas.

This instrument has a maximum amount of US$10.000, although entrepreneurs can obtain financing for less than this amount. For Pulido this allows them to join the formal economy.

"That means that you must then have benefits for your employees, that you are going to pay taxes, then you enter into the mechanism of the formality of the economy," he stressed.

According to data presented by President Maduro, 500.000 enterprises have been registered in the country.

Sanctions, an Achilles heel.

Despite the potential of this market, there are internal and external factors that impede its growth. One of them is the commercial and financial sanctions that the United States and other powers have imposed on Venezuela.

The BVC, for example, talks with representatives of this market in Argentina and Panama, to create mechanisms that allow securities to be traded between them. However, the settlement restrictions through the lack of access to international banking is an impediment to this.

So everything that is issued through fixed income, that has a title that is kept in the Venezuelan Securities Fund, which is also a payment agent. If you have a title from abroad, you couldn't pay it because no correspondent bank wants to do business with Venezuelan companies,” he said.

This problem of access to international banking not only affects the stock market, the banking sector is also quite limited, because it is very difficult for transfers from abroad to reach Venezuela, which is not beneficial for foreign investment.

Internally, the Executive authorized banks to finance companies through securities. However, the president of the BVC assured that the law must be modified to make this action effective. "The law must be modified and I hope it will be done soon because that would be a wealth of money destined for productive companies," said Pulido, who highlighted the favorable growth figures that the loan portfolio had in recent months.
Financing to the different sectors of the economy, he said, must be done in both ways: the stock market and banking.

"You have the bank credit that is shorter term and you have the stock market instruments that are longer term, and they help each other, they compensate each other," he added.

It is expected that this 2023 the stock market will continue to grow within the new economic dynamics that the country presents, in which financing for the productive sectors no longer comes from oil income but from investment.

For those who are willing to become investors, it presents a range of options that can be adjusted to their needs, since it also adapts to what the real economy presents.

The BVC will present factoring as an innovation for this year, which allows companies to carry out a credit assignment operation to advance collection mechanisms and achieve immediate liquidity.

investing is easy

If you want to participate in the stock market it is very easy. To do this, you must register at any of the brokerage firms or brokerage firms authorized by Sunaval -which you can see through its website www.sunaval.gob.ve-, who will help you with the registration procedures through of the Venezuelan Stock Exchange.
The requirements that you must possess in the first instance are a copy of the identity card and a bank account, if you are going to invest amounts less than 2.000 bolivars.

In the event that the investment amount exceeds the previously stipulated, you must attach a copy of the current single tax information registry (rif) and an income attestation report, issued by a public accountant, when it comes to whether it is independent, or a Proof of work, if you are under a dependency relationship.

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