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Chavez plans hit Venezuela market Chavez plans hit Venezuela market
(10 minutes later)
Venezuela's financial markets have tumbled after President Hugo Chavez promised to nationalise the biggest phone and power companies.Venezuela's financial markets have tumbled after President Hugo Chavez promised to nationalise the biggest phone and power companies.
The Caracas Stock Exchange Index lost nearly 10%, while bonds also dropped. The Caracas Stock Exchange lost 15%, as bonds and the bolivar also dropped.
Leading declines were telecoms firm CA Nacional Telefonos (CANTV), which plunged by 25%, and power firm Electricidad de Caracas, down 20%.Leading declines were telecoms firm CA Nacional Telefonos (CANTV), which plunged by 25%, and power firm Electricidad de Caracas, down 20%.
While Mr Chavez had outlined some of his plans, analysts said he has decided to go further than previously thought. While Mr Chavez had outlined some of his plans, analysts said he had decided to go further than previously thought.
Mr Chavez, who is being inaugurated for the third time as president, unveiled his plans on Monday during a speech to the nation. The plans are all part of a wider changes aimed at developing a "Socialist Republic of Venezuela".
"All of that which was privatised, let it be nationalised," he said. "The news comes as a surprise, as we were under the impression that President Chavez supported direct foreign investments," said Bank of America analysts in a research note.
A number of foreign firms are likely to be affected, including US power company AES and US phone firm Verizon. Wall Street heavyweight Merrill Lynch said the situation was very serious.
The plans would also end foreign control of refineries of crude oil in Orinoco. Mr Chavez, who is due to be inaugurated for the third time, unveiled his plans on Monday during a speech to the nation.
"All of that which was privatised, let it be nationalised," he said, adding that the central bank's autonomy would be removed as part of wider plans to change Venezuela's constitution.
Foreign players
Foreign Investors were shaken up by the news, and shares were hit in Mexico where the main stock index lost 2% because a number of companies have close business links with Venezuela.
Among the other foreign firms that are likely to be affected, are US power company AES and US phone firm Verizon.
AES lost more than 4% in New York, while Verizon was little changed.
The changes would also end foreign control of crude oil refineries in Orinoco.
Another factor hurting Venezuela's markets on Tuesday was a dip in the price of crude oil that threatens to dent the nation's most lucrative natural resource.
Earlier in the day crude oil fell below $54 a barrel in New York despite threats by oil group Opec to trim output, and a spat between Russia and Belarus that has hurt European supplies.
Much of Mr Chavez's poverty plans have been based on securing money from Venezuela's energy sector.