There is a real possibility that there will be a stock exchange in place by the end of March 2003. Three companies, GNCB Trust, Beharry Stockbrokers and Trust Company (Guyana) Limited have formed a company called Guyana Association of Securities Companies and Intermediaries (GASCI). This is a Self-Regulatory Organisation under the new Securities legislation and other brokers are entitled to apply to it for enlistment. All the brokers will have to be registered with the Securities Council, the main regulatory body, by the 23rd January, 2003. Mr Brian James, the President of that council, had indicated that he hopes to have the officers in place and functioning by the 3rd January, 2003. Reports indicate that it has been difficult to find suitable personnel both for the council and to run the stock exchange. GASCI has rented offices at the Hand-in-Hand building where the stock exchange will function. In the early stages it is likely to hold a trading session once a week.
The main public companies in which shares are now traded are Banks DIH Limited, Demerara Distillers Ltd, the National Bank of Industry and Commerce Limited (NBIC), the Guyana Bank for Trade and Industry Limited (GBTI), Guyana Stockfeeds Limited, Sterling Products Limited, Demerara Tobacco Co Ltd (DEMTOCO) and J.P. Santos and Company Limited. In the last six of these there is a dominant or majority shareholder. Nevertheless, there has been some trading in shares in recent years and considerable fluctuation in share prices. Shares in NBIC were at one time trading as high as $40 a $1 share but in recent times have been trading as low as $15 a share. The price will not have been helped by the recent decision not to declare a dividend. The value of Banks DIH shares has also fluctuated considerably and would have been affected by a rights issue which was later followed by a bonus issue. Shares in Demtoco had fallen to rock bottom but since they ceased manufacturing and are engaged purely in the distribution of cigarettes, profits and the share price have shot up.
So though the previous call exchange had failed, there is some trading in shares and prices do change. The problem used to be that there were many willing buyers but few willing sellers, partly because shareholders as a whole had little idea of the real value of their shares and being therefore unable to assess the prices offered, preferred to hold them. More recently, there have been more sellers as some people have moved to realise their assets. Pension funds already hold fairly substantial investments in local companies and the opinion has been offered that they are unlikely to increase their holdings dramatically in the near future. In developed economies, of course, pension funds and other institutional investors like insurance companies are major market movers.
Whatever the drawbacks and initial teething problems, the setting up of a stock exchange must be strongly welcomed. In an economy in which it is widely agreed that the private sector has to be the major engine of growth, it is essential that the necessary supporting architecture be put in place and a stock exchange is an important part of this. Not only does it provide a quick and reliable outlet for selling shares, thus making shareholdings more liquid or realisable than they are now, but they provide a mechanism for the primary issue of shares to raise capital which may be useful for some of the local companies that now face a heavy debt burden which threatens to crush them. When the stock exchange gets going and is well established it can consider expanding the securities traded to include government bonds. It may also be possible, one hopes, to encourage some of the largest private companies to go public and perhaps the government might consider incentive legislation for that purpose.
Achieving a vibrant, private sector economy is at this stage a dream. So many things have to change including public attitudes to investment, entrepreneurs and wealth. Many of the old, hostile attitudes from another era are still prevalent despite the rhetoric. Large sections of the old business class have emigrated or closed down and the new one understandably lacks confidence in itself and in the future. But despite this, life goes on and chief executive officers and managers try to keep things going and even, in a few cases, to innovate and expand.
Even if it has a slow start, a stock exchange will be valuable as a symbol that the country is indeed committed to the concept of private sector development and investment. We must hope that it will at last come on stream as planned and that in the course of next year citizens and, in particular, the thousands of small shareholders that already exist will begin to see investing in shares as a valid method of saving and as a way of taking a direct interest in the economy. A vibrant free enterprise economy is essential to our progress.