Wednesday, July 25, 2007

Latin America "nationalization" hitting corporate bottom lines

The nationalization trend in Latin America is starting to show up on Wall Street earnings reports. In the long term, this will have the impact of dragging down the entire market in the region and all the outside business operations associated with it.

The most recent examples include ConocoPhillips net income dropping off 94% due to the confiscatory activities of Hugo Chavez's government in Venezuela. HNR (Harvest Natural Resources) also reported a loss after not being able to recognize equity earnings from Venezuela.

It can only be expected that this trend will get worse moving forward into 2007. Investors should consider slowly moving out of their Latin American investments over time; and take a close look at natural resource stocks they hold which may be significantly impacted by the policies of Hugo Chavez in Venezuela, Evo Morales in Bolivia, and Rafael Correa in Ecuador.

Venezuela charge hits ConocoPhillips earnings