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Dow Jones eliminates Venezuela from its indexes
MarketWatch
NEW YORK
Petroleumworld.com 03 29 07
Venezuela, an oil-rich country that has launched a nationalization spree in several key industries, will be scrapped from the Dow Jones Wilshire Global Total Market Index family, a gauge of world equities.
The impending nationalization of companies with a significant amount of foreign ownership has seriously damaged the risk premium for Venezuela, Dow Jones Indexes said in a statement Wednesday.
Venezuelan President Hugo Chavez has pledged to nationalize assets in important industries such as electricity, oil and mining.
"The country risk, as measured by the Index of Economic Freedom, fell below Dow Jones Wilshire Index's eligibility standards," the statement said.
Six Venezuelan companies will be removed from the Dow Jones Wilshire Global Total Market Index, Dow Jones Wilshire Americas Index, Dow Jones Wilshire Global ex-U.S. Index, Dow Jones Wilshire Emerging Markets Index and Dow Jones Wilshire Latin America Index. The changes are to go into effect on June 18.
Among the six companies is Venezuela's largest telecom carrier Nacional Telefonos de Venezuela, or CANTV . Chavez has signed an agreement to buy a 28.5% stake in CANTV held by Verizon Communications Inc.
The other five companies to be removed from the indexes are banks Mercantil Servicios Financieros, Banesco Banco Universal and Banco Provincial; cement and concrete supplier Cemex Venezuela; and steel producer Siderurgica Venezolana Sivensa.
Venezuela, a founding member of the Organization of Petroleum Exporting Countries, was the world's eighth-largest oil exporter in 2005. Its economy has grown rapidly, fueled by its huge oil revenues.
Chavez has consolidated his power over the country. He controls Congress, the judiciary and the army. His nationalization campaign and hostility toward the markets has made him very unpopular with foreign investors. See related story.
A presidential decree issued earlier this month requires state-owned Petroleos de Venezuela S.A. or PDVSA, to take operational control of four heavy oil projects in the Orinoco Basin, the country's richest oil deposit, by May 1. The decree also requires Venezuela to increase its stake in the projects to at least 60%. Leading oil companies such as Exxon Mobil of France have invested billions of dollars in the projects.
Chavez has already signed an agreement to buy an 82.14% stake in electric utility Electricidad de Caracas.
The Dow Jones Wilshire Global Total Market Index measures 12,774 stocks in 59 countries with a float-adjusted market capitalization of $37.5 trillion.
Dow Jones Indexes is a unit of Dow Jones & Co., which also owns MarketWatch, the publisher of this report.
Polya Lesova is a MarketWatch reporter based in New York.
MarketWatch 28 03 07
Copyright© 2007 MarketWatch . All Rights Reserved.
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