High Inflation and Overvalued Exchange Rates in Venezuela May Mean Bargains for Investors
In spite of Venezuela’s recent economic stagnation and poor reputation with regards to foreign business, there are still undervalued investment opportunities that won’t be overlooked for too much longer. Metrospaces Inc. (MSPC) recently announced another acquisition, this one in Coche Isalnd, making it their second project in 9 months in Venezuela alone. In the recent deal, Metrosoaces has acquired a 50% stake in this posh villa-style luxury hotel on Coche Island that may fetch as much as $300 a night for a room.
Even in a country with a less-than-favorable business climate, there are still winners and losers as economic aggregates continue to mask the full story from investors. The oil boom taking place in the in the Orinoco Oil Belt has cemented itself as a strong economic force, driving growth throughout the area. Metrospaces Inc. hopes to continue to capitalize from high-end boutique hotel developments throughout Latin America, as PDVSA (the state owned oil company), along with some of the major oil companies such as Chevron, British Petroleum, Total, Lukoil and many others, invest $200 billion in exploration and production in the area.
Due to favorable government policies aimed at stimulating sector-specific growth, Venezuela continues to experience a boom in hotel construction. In spite of gross currency misalignment, inbound tourism continues to surge upwards. This increase has been best explained by its booming oil industry coupled with a fully functional and thriving black-market of foreign currency which has grown around oppressive regulation and dubious banking practices (Shhh! We won’t tell if you don’t). This represents a clear case where there is more to the story than the numbers may suggest to investors looking for solid public companies in emerging markets.
The poor economic data means investors, weary of the “suggested” risks, continue to misjudge the opportunity for high gains in what are clearly privileged industries in Venezuela. Currently, Metrospaces Inc. is undertaking projects all over Latin America from Buenos Aires, Argentina to Caracas, and Venezuela. With the birth of the business boom that has started to manifest in the Pariaguan region and the Orinoco Oil Belt, Metrospaces could be well positioned to take advantage of that “boom” just as it’s beginning. Metrospaces remains poised to jump on opportunities as soon as they present themselves. We will continue to keep you updated on the progress Metrospaces is making on these two projects. In my opinion, this is one company you cannot afford to take you eyes of off.
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