The Caracas Stock Exchange: The New Frontier
On 3 January 2026, the United States captured the president of Venezuela.
\r\n\r\nNicolás Maduro and his wife were arrested on narco-terrorism charges and removed from the country. His Vice-President, Delcey Rodríguez, has been allowed to stay in power as long as she dutifully executes the policies dictated by her new masters in Washington.
\r\n\r\nFor anyone who has spent a career looking for radical changes in foreign markets, that is the kind of morning you remember.
\r\n\r\nI have watched this happen before. My career began at a firm that had already launched the first Korea fund, at a time when Korea was a closed market under a military government. In 1992 I launched the first US mutual fund for PaineWebber (a name that has all but disappeared, though some readers will remember it), to invest in both Western and Eastern Europe. Countries like Poland or Hungary were rediscovering free markets after decades of poverty under communism.
\r\n\r\nInvestors in those markets have done very well. The Korean market is up 27 times in dollars since 1985. Both the Warsaw and the Budapest stock markets have appreciated more than 35 times in dollar terms since they reopened in 1991. Most of that performance came early on.
\r\n\r\nVenezuela could be an even better opportunity.
\r\n\r\nA New World Order
\r\n\r\nThe US is refocusing foreign policy on its own hemisphere. It is slowly reducing its military footprint in Europe. The message sent to NATO countries that they cannot forever subcontract their security to Washington has been received. The US is also extracting itself from the Middle East. As a net exporter of oil and gas, America’s presence will inevitably shrink once the Iranian existential threat is resolved. Finally, the US is bringing back home manufacturing from China. Decades of delocalization to a hostile communist country is being reversed. Unfair competition and an unprecedented military build up have created today’s backlash.
\r\n\r\nThe United States is realizing it cannot run the world. But the world is welcome to join us. Venezuela is ready to do just that.
\r\n\r\nLatin America is moving away from Fidel Castro’s long shadow
\r\n\r\nThe arrest of Maduro was not an isolated event, with the United States turning toward its own hemisphere, a turn the press has already dubbed the Donroe Doctrine.
\r\n\r\nAcross Latin America the political direction has turned commercial, from Argentina to Colombia, Peru and Chile. In Argentina, poverty spiked above fifty percent in Javier Milei's first months and ended 2024 at thirty-eight, below what he inherited. Monthly inflation has since collapsed toward low single digits.
\r\n\r\nNowhere is the new policy more direct than in Venezuela, where Washington exercises exceptional leverage over the transition. Caracas's ties to Cuba and Iran have been rolled back, while Washington means to keep its adversaries, China and Russia, away from the reopened oil industry.
\r\n\r\nMarco Rubio, the "Viceroy" of Venezuela.
\r\n\r\nThe Washington Post used the label in January, and subsequent reporting has reinforced it. Rubio’s plan for the country runs in three phases, from stabilization, through economic recovery and political reconciliation, to a democratic transition. The pace seems deliberate, so why is Washington in no hurry to hold a vote?
\r\n\r\nVenezuela, like most Latin American countries, suffers from the strongman syndrome. Bolívar was a great general. He liberated 5 countries. But, unlike Washington and the founding fathers in the US, he was not able to leave a strong and lasting constitution. As a result, Latin American countries have been especially vulnerable to the concentration of power, be it by plutocrats or charismatic politicians.
\r\n\r\nIt is therefore Rubio’s intention to first consolidate the Venezuelan institutions with as much consensus as possible before moving ahead with potentially destabilizing elections. Let’s not ignore that the Chavistas still enjoy the support of 20% of the population. Replacing the corrupt Maduro regime with a revanche-seeking administration would only perpetuate past practices and alienate a large group of the population.
\r\n\r\nVenezuela collapsed into strongman rule before 1958 and again after 1998. That is the pattern the design has to break. What has made the American system durable is a constitution written to survive mediocre and power-hungry politicians.
\r\n\r\nThe politics underneath are not gentle. Delcey Rodríguez, who became acting president after Maduro's removal, was his vice president and his oil minister, from the same party he led (the PSUV, in power since Chávez). Washington backed her over Edmundo González Urrutia, whom the State Department had itself called the rightful winner of the 2024 election, and over the opposition leader María Corina Machado. Machado herself remains in exile, her attempts to return after the earthquakes reportedly blocked. The two cannot govern together, and the process is not asking them to. The dialogue Washington supports is led by Jorge Rodríguez, the acting president's brother, with Dinorah Figuera, president of the 2015 National Assembly; Machado's faction has stayed out but can’t be ignored since she is the overwhelming favorite candidate to the presidency.
\r\n\r\nThen June intervened, when two earthquakes on the 24th killed more than six thousand one hundred people and complicated a stabilization effort that was already difficult. The government's response satisfied few. Polling done for Bloomberg after the disaster put the acting president's disapproval above sixty percent, with nearly two-thirds faulting the earthquake response itself. There is even a case that Machado is fortunate to be watching this disaster from the outside. She might not have been ready to organize a better response to the disaster. More importantly, María Corina-as people refer to her-may benefit from the needed but unpopular decisions being taken during a difficult transition. Letting her archenemy do the hard work might be good tactics.
\r\n\r\nSecretary Rubio told Congress in June that progress had been significant but that "in order to truly transition, they have to have multi-party, free and fair elections." That has not yet happened.
\r\n\r\nEconomic Challenges.
\r\n\r\nThe main challenge comes from a lack of capital. The Venezuelan economy suffers from capital scarcity, not asset quality. After decades of mismanagement, Venezuela needs to bring its inflation under control, reliquify the banking and capital markets and start growing again.
\r\n\r\nIn default since 2017, Venezuela is estimated to owe nearly two hundred forty billion dollars (to bondholders, to arbitration creditors, to China), more than twice a GDP of about one hundred eleven billion. Real GDP contracted by more than three quarters between 2013 and 2021 and remained far below its 2013 level in 2025. Ruin is there in those numbers, but so is the amount of ground there is to regain.
\r\n\r\nThe Economist Intelligence Unit forecasts year-end 2026 inflation of 238.8%. The central bank reported prices rising 19.9% in July alone, after 13.8% in June, which shows how unsettled the path still is. That is a catastrophe by any normal standard but an enormous improvement on what came before. The working answer on the street has been the dollar. Transactions in Caracas already run largely in dollars, yet the country is resisting full dollarization. An official exchange rate survives.
\r\n\r\nWhen I was there recently, the gap to the parallel market had narrowed to something like fifteen percent from over 30% on my previous trip two months earlier. The scarcity of physical dollars has pushed people and companies to stablecoins, mostly USDT, reachable by anyone with an internet connection and an online wallet. Erebor, a new American bank chartered in February around stablecoin business, has offered Venezuelan banks correspondent lines back into the U.S. financial system. If dollars can move at scale, the transactional problem eases, though that does not by itself fix what causes the inflation.
\r\n\r\nIn attempting to control inflation, the central bank requires banks to hold seventy-three percent of their net local-currency liabilities in reserve, which leaves them little to lend. Credit is a different bottleneck from dollars. Venezuelan companies cannot borrow their way to growth, a fact that decides where capital will have to come from. A banking system made to sit on seventy-three cents of every bolívar it owes amounts to a vault with tellers.
\r\n\r\nThen there is the physical plant, where UN agencies say the cost of reconstructing basic infrastructure after the earthquakes could exceed thirty-seven billion dollars, close to a third of national output, in a country whose grid was failing before the ground moved. In Caracas and on Margarita Island the lights at my hotel went out regularly before the generator caught.
\r\n\r\nWhat has changed is who controls the money that could pay for part of it. Venezuelan oil now sells under American supervision. The revenue is deposited into accounts in the custody of the U.S. Treasury which makes sure it is no longer ending in the generals’ pockets. "We're the bankers, we don't direct the funds," is how Secretary Bessent has described the arrangement. U.S. officials say the arrangement is intended to reduce diversion, though Congress is still seeking the audit trail needed to judge whether it works.
\r\n\r\nAdd the new hydrocarbons law, built around an estimate that restoring the industry will take a hundred billion dollars over a decade, with ExxonMobil and ConocoPhillips reportedly negotiating their return, and a picture forms. Capital is arriving into oil, and the debt restructuring has reached the stage of appointing advisers. What does not exist yet is a way for an equity investor to take part at any serious scale.
\r\n\r\nThe Stock Market Opportunity.
\r\n\r\nSo where does a company go for capital when the banks cannot lend at scale? The obvious answer is the stock market, which Venezuela still has, barely. Fewer than forty companies are listed today, against nearly a hundred at the end of the 1990s, before Chávez. The exchange's president told me he spends his weeks hosting companies, making the case for what a listing could offer them. This spring Bloomberg reported that roughly ten initial or secondary offerings were expected within four months. Trading volumes, the president believes, will clear a billion dollars in 2026 for the first time in almost twenty years. The whole market, worth about twenty billion dollars after nearly doubling in a year, remains no place for an institution. Low trading volumes still keep banks and foreign investors mostly out, while the offering queue so far is made of private companies. The pressure to use this market, meanwhile, arrived in July from outside.
\r\n\r\nIn July 2026 Nutresa, the Colombian food group, agreed to buy Industrias Tío Rico, Venezuela's leading ice-cream maker. The same month, Uber agreed to acquire Delivery Hero, the German group whose PedidosYa runs food delivery across Venezuela. That deal would move PedidosYa's Venezuelan business inside a much larger foreign owner. The first deal tells local companies that deep-pocketed foreign buyers are moving in while assets are cheap. The second shows that ownership can change from a boardroom an ocean away. A local company that wants to stay independent (the ride-hailing platforms Ridery and Yummy Rides must surely feel the pressure) has one route to capital the banks cannot provide. It can raise it on the exchange.
\r\n\r\nExporters run the same logic from the other side of the ledger, with Santa Teresa the cleanest example. It sells its rum in more than eighty countries from a very low cost base. Companies like these are the material of the listing wave we expect as the free economy re-establishes itself.
\r\n\r\nMercadoLibre, which we hold, was significant in Venezuela years ago and could rebuild that presence. The many nationalized companies are likely to be re-privatized. Private companies needing capital will come to the market with IPOs. Down the road, in a not too distant future, we can expect the development of a private pension fund system which would bring enormous support to the market. The Chicago Boys showed in Chile how powerful this can be. The virtuous circle of capital markets is just starting.
\r\n\r\nWhy expect the wave at all? Because Venezuela's socialism, for all the ruin it caused, was short. When I arrived in Warsaw in 1992, the country was rebuilding a market economy from a blank page after half a century without one. By contrast, Venezuela's experiment wrecked the economy in a single generation, recently enough that the people who ran the previous one are still alive. Many of them are abroad holding capital and skills the country will need. Some are already coming home. That memory of capitalism is an asset no balance sheet carries. It is also the one thing a frontier investor does not want to buy once the reopening becomes consensus. When the Caracas exchange will make the headlines, the big returns will be behind us.