News that Hugo Chavez has checked back into the hospital with kidney failure is giving some traders hope that Venezuela could open up to foreign investment again in the foreseeable future.
Chavez previously went to Cuba on June 9 to have tumors removed for an as-yet-mysterious form of cancer.
Since returning to Venezuela, he has cut down on public appearances but still seems eager to run for the presidency again.
Chavez has ruled Venezuela since 1999, nationalizing key industries along the way — most recently, gold — and serving as an example for similar-minded left-wing politicians.
Since his rise to power, opportunities for retail investors to get involved in Venezuela’s oil wealth in particular have tapered off to almost zero.
If he is sick enough to step down in the near term, it could not only shake up Venezuela a bit but be a huge change for markets throughout the region.
Losing him unexpectedly would create a significant power vacuum in this resource-rich country.
A successor government might well lean toward the left — as Brazil and other countries currently do — while exploring more market-friendly ways of doing business.
Needless to say, the Caracas market would rally off the charts if and when we see a real change of power in Venezuela.
Of course, ways for U.S. retail investors to get exposure to Venezuela are practically nonexistent as yet.
But perversely, any liberalization of the Venezuelan economy could drive allocations out of markets like Peru and Colombia — represented by EPU (quote) and GXG (quote) , respectively — as money moves to welcome the country back into the global framework.