Securities Council says Reis' share price remarks misdirected
Stabroek News
April 9, 2004
The Guyana Securities Council (GSC) has responded to comments by Banks DIH CEO Clifford Reis over whether the security exchange GASCI should be making statements about the company's share price "and that GASCI ought to be more objective."
The GSC says all "registrants with the Guyana Securities Council have recourse with the Guyana Securities Council. If Banks DIH had information alluding to irregularities at the Exchange, this issue should have been first addressed with the Council."
The GSC press release was orginally sparked by remarks made by Reis to shareholders in Berbice where he expressed concern over the company's share price and suggested that it was being manipulated on the exchange.
GASCI then outlined in detail the trading activity of the stock since the exchange opened and the procedures for all trades.
In its response to Banks, the GSC says "it is aware that Guyana Association of Securities Companies and Intermediaries Inc., (GASCI) was merely responding to an allegation.... Reis on March 23, 2004 when he questioned the manner in which the value of shares are determined on the Stock Exchange, saying "I am very concerned about who are the persons involved in trying to manoeuvre the company's shares."
This allegation suggested irregularities and imputes the integrity of the Stock Exchange, and as such the Exchange is allowed to defend its systems and employees' integrity.
The Guyana Association of Securities Companies and Intermediaries Inc., (GASCI) is a registered Self Regulating Organisation and has certain provisions under the law to, says the GSC and states that among those provisions is to "provide for the protection of investors and the public interest, foster co-operation and co-ordination among persons who clear, settle, regulate, process information about and facilitate trades in securities.
GSC also states that GASCI is there to prevent deceptive and manipulative acts and practices and to promote fair trading practices and to facilitate an efficient market.
An independent analyst has pointed out that Banks' profitability since 1999 has been in decline, with after tax return on equity decreasing from 13% in 1999 to 7.9% in 2003.
While revenues have increased, net profit for the group has only increased from $631M in 1999 to $666M in 2003. The cash cost of dividend payouts rose from $165M in 2000 to $190M in 2001 and 2002 but fell to $155M in 2003.
And for the average shareholder it is the dividend yield, equivalent to the interest on a savings account, that is a strong motivator in why shares are bought and sold. In 2003, Banks declared a dividend of 22 cents down from 27 cents in 2002. At the current share price of $5.90 and taking into account the bonus issue this gives a dividend yield of 3%.