U.S. & Cuba Formally Restore Diplomatic Relations; CUBA Fund, Related Stocks Rise
Shares of the Herzfeld Caribbean Basin Fund, Inc (NASDAQ: CUBA) were up 8 percent on Wednesday after U.S. President Barack Obama made public his plans to “formally reestablish diplomatic relations with the Republic of Cuba.”
Consequently, Obama announced that both countries will once again set up embassies in each other’s capitals. The U.S. will open an embassy in Havana over the course of this summer.
Obama said, “this is not merely symbolic,” adding he expects this development to kick off a “new chapter” in the relation with the Caribbean country, ending with more than half a century of estrangement and hostility.
“Americans and Cubans alike are ready to move forward,” he stated.
Individual stocks responding to the news included MasTec, Inc. (NYSE: MTZ) and Sherrit Intl Copr R (OTC: SHERF). Regarding the former, founded by Cuban American immigrant Jorge Mas Canosa, the fund’s manager Thomas Herzfeld said, MasTec "has the technology and resources and the understanding of Cuba” to capitalize on an eventual opening of business opportunity in the island.
Sherrit, for its part, is surging, for it operates in Cuba. This small-cap natural resources company would benefit from an end to the Cuban embargo.
Also on the rise were cruise liners Royal Caribbean Cruises Ltd (NYSE: RCL), Norwegian Cruise Line Holdings Ltd (NASDAQ: NCLH) and Carnival Corp (NYSE: CCL), as American tourism in Cuba could pick up following Wednesday’s news.
It should be noted that all of the stocks mentioned above are a part of the Herzfeld Caribbean Basin Fund’s equity portfolio.
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