The Stock Exchange is off and running and though the trading has so far been modest the existence of this institution is an important step forward.

It would seem that there has been little institutional buying so far. Reports indicate that the large pension funds already have substantial holdings in the major public companies such as Demerara Distillers Limited, Banks DIH Limited, the National Bank of Industry and Commerce Limited and the Guyana Bank for Trade and Industry Limited. There has not, therefore, been a substantial unsatisfied demand and therefore no anxiety to snap up shares that have been put on the market. Institutional buying plays a big role in all stock markets.

But there have been some encouraging signs. Prices in the leading shares have fluctuated somewhat in response to offers and bids, as they do on all markets. Analysts like Mr Christopher Ram in his Business Page in Sunday Stabroek have drawn attention to some of the basic criteria used to value shares everywhere like the price-earnings ratio and using those tools has offered his comments on the prices at which shares are now being traded. He highlighted the apparently very attractive price of Demerara Tobacco shares, though as he also noted some investors, both here and overseas, have ethical objections to investing in the shares of companies which manufacture or distribute cigarettes. Mr Patrick van Beek, an actuary, has also pointed out in an interview in the recent issue of Stabroek Business that though bank accounts are safer, investors usually benefit more from investing in equities.

The good thing is that a culture of investment has been created, though it is still embryonic. Steps can be taken to encourage it. For example we believe it would be useful for those who are connected with the stock market to institute a modest publicity campaign in the media telling people how to buy shares and the possible benefits of shareholding. Both Banks DIH and DDL have over seven thousand shareholders so there are people out there already who have some experience of owning shares, and quite a few of them have attended annual general meetings when the directors of the companies have accounted to the shareholders for their stewardship of the company’s business. Give the public some idea of the dividends these shareholders have received, what they paid originally for their shares and what they are now worth. Try to bring shareholding down to the man in the street, as the late Peter d’Aguiar tried to do when he issued the prospectus of Banks DIH Limited forty years ago. There are potential buyers out there but the work has to be done to get them interested.

Secondly, the government can seek to develop the market by creating tax incentives for large private companies to convert to public companies and to issue some of their shares by prospectus. This will widen the choices available for investors and make the market more attractive to the institutions who can spread their risk.

The institution of the stock exchange is an essential step in the introduction of a business culture which is still at a primitive level in Guyana, even in comparison with Trinidad and Jamaica, and which will have to develop and become much more sophisticated if the private sector is to become the engine of growth, as both the main political parties repeatedly proclaim is their objective.