A couple of years ago on the old blog, I posted about how cheap Venezuela’s stock market was. Back then, it had an average P/E of 2. Checking the FT’s Yield & P/E by Country (PDF) today, the average P/E is now 0.4 (though the average dividend yield has dropped from ~20% to ~15%). As I mentioned in the old post, the obvious explanation for the low valuation is the fear of nationalization or expropriation by the Chavez government. Thinking about this some more though, I wonder if it would be possible to pick a small basket of Venezuelan companies unlikely to be nationalized or have their assets expropriated. Offhand, I would think the best candidates for this would be relatively small, niche, companies that serve business customers, particularly ones that require enough skilled labor that the workforce couldn’t easily be replaced. Might be worth doing some research on this.
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