Venezuela: dictatorship confirmed
The humanitarian crisis resulting from president Nicolas Maduro’s resolve to remain in power has continued to incite the population to seek refuge in neighbouring countries.
Venezuela, which our management teams have avoided for a long time, does not comply any longer with the minimum requirements to be eligible for investment. Specifically, Freedom House, the NGO which is specialised on this topic, has granted the ‘non-free’ status to this country, whose fundamental rights have deteriorated substantially in the past ten years, to a similar level as Ethiopia, Yemen and Mauritania.
This non-democratic status has recently been confirmed by the second source covering this domain, namely the Democracy Index published by The Economist. Indeed, this index has downgraded Venezuela’s status following the country’s relegation to an authoritarian regime, in which the government cracks down on the opposition, imprisons or abducts opposition leaders and violently slams any opposition or protest movement. Moreover, liberty of the press in the country is reigned in, with the government refusing access to journalists wanting to cover protest movements.
Stability of the sustainable profile of the major exposures
The portfolio, which does not take into account any constraints of reference indices, holds major positions in Mexico, Brazil, Indonesia and South Africa. We see that, overall, these countries have been able to maintain their sustainability scoring over one year.
As mentioned during the previous quarter, the election calendar of the next few months will be a key factor in several countries, in particular Brazil and Mexico.
Brazil is mired in a major economic recession, and it faces many corruption scandals which have shocked the entire political class. Outsiders are well placed to profit from these events. On the economic front, it is important to reduce the budget deficit and to reform pensions. However, public debt to GDP seems to be under control.
In Mexico, the tensions over the NAFTA agreements and the corruption scandals which have emerged left and right have encouraged the protest and anti-corruption movements. The issues of crime, violence and corruption remain key concerns of the population.
Looking at the various sustainability indicators we cover, these two countries have remained quite stable in the past year.
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