It is the nature of Wall Street to react positively or negatively to any type of information that could affect the markets regardless of the morality behind it.
This past Tuesday former Venezuelan President Hugo Chavez passed away after a long battle with cancer, and Wall Street naturally reacted to this news. Among the benefitted of Chavez’s death was Harvest Natural Resources (ticker: HNR), a petroleum and exploration company with around 70% of its assets in Venezuela according to Yahoo Finance.
A couple of months ago Harvest Natural Resources tried to sell its assets in Venezuela for $725 million to an Indonesian company but failed in the process. In order for the deal to go through, HNR needed the three votes of approval: one from the Venezuelan government, one from the Indonesian government, and another one from the majority owning party. The Indonesian government ended up denying the deal. This led to a downward trend and a 35.5% loss in stock price.
After Chavez’s death it seems investors have concluded that HNR might have an easier time obtaining a deal with a new buyer according to CNN Money. Shares rose by 5.4% on early trade Wednesday.
We have seen in the past similar cases. For example Gerald Pencer CEO of Cott Comparison died of cancer in 1998. After his death the stock price increased by 8.1%, as investors saw Pencer’s death as a new beginning to the company and an opportunity for innovative changes.
This is a prime example of how non-financial information can have a striking effect on the markets, hence why we follow it every day.
By: Luis Alfonzo Chacin
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