Venezuela's Stock Market Surges 50%: What's Behind This Rally After Maduro's Arrest?

After Venezuelan President Nicolas Maduro ouster, investor sentiments have grown favourable towards the South American country's stock market.

On Monday, January 5, the Caracas Stock Exchange rose 16%, and continued its bullish run on Tuesday, January 6, surging 50%.

The Latin American nation's IBC index recorded a high of 3,910.42 in the previous trading session, ending 3,896.77, signalling a 50% increase.

As per market data, the index surged 4,400% in 2019 and 1,380% in 2020, followed by solid gains of 344% in 2021. In 2024, the bourse surged 106%.  Meanwhile, this stock market index has added almost 162% in a month and a whopping 2,979% in a year.

Currently, ousted Venezuelan President Nicolás Maduro remains in a NYC jail facing US drug-trafficking and linked charges. On the other hand , opposition leader María Corina Machado has voiced out her plans to return to Venezuela soon to lead the nation.

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What's Behind This IBC Index Rally?

The Venezuelan stock market is likely factoring in ramp up in oil production, entry for several US oil companies like Axiom Mobile, and a pro-private investment leader unlike Maduro, and Chavez, ex-Venezuelan President, according to sources. 

The key supporting factors to IBC index's latest surge are heightened expectations of a regime change and low liquidity.

However, the country's outstanding obligations stand at $160 billion, including those to private bondholders, company debts and loans from China, and arbitration awards. Meanwhile, the International Monetary Fund (IMF) has estimated Venezuela's annual inflation could end the year at 548%, as per a Bloomberg's report.

Venezuela's stock market cheered the US raid on the Latin American country over the weekend to oust Venezuelan President Nicolas Maduro, with the Caracas Stock Exchange recording a massive run-up in the last two days.

After surging 16% on Monday, the Caracas Stock Exchange's IBC index jumped another 50% on Tuesday, January 6, taking the two-day rise to 75%.

The IBC index rose to a high of 3,910.42 in the last trading session and ended the day at 3,896.77, a jump of 50.01%. The index has added almost 162% in a month and a massive 2,979% in a year, far eclipsing the returns given by any major stock markets or commodities.

Venezuelan President Nicolás Maduro remains in a New York jail facing US drug-trafficking and related charges. Meanwhile, opposition leader María Corina Machado has said she plans to return to Venezuela soon to lead the country

In a related development, US President Donald Trump has announced a deal for the United States to import up to $2 billion worth of Venezuelan crude oil, a move expected to boost supply for the world’s largest oil consumer.

The arrangement allows Venezuelan crude, estimated at 30 to 50 million barrels, to be supplied to US buyers at market-linked prices. The exports are expected to take place over the coming months, under Energy Secretary Chris Wright.