Notes From The Margin

April 7, 2008

Is The Barbados Stock Exchange Becoming Irrelevant? Is it already?

We on the margin were reflecting on the recent conclusion of the Neal & Massey BS&T takeover. Neal & Massey were successful of course in buying the entire company. Some 97% of shareholders willingly took the offer and the remainder were bought out by N&M following the 90% rule. (If you own 90% of a public company you can take possession of the other 10% of shares just by paying for them). So lock stock and barrel, BS&T as an independent entity is history. What was once considered the symbol of white corporate power in Barbados has been sold (but that is another post).

So what happens next? Of course the company will be de-listed from the BSE, it’s now a wholly owned subsidiary so it won’t be traded. As a result the numbers of companies on the exchange take a hit. This will be the latest in a series of reductions in the number of public companies in Barbados. Island Properties Ltd. was taken off the exchange by Colin Brewer & Tony Hoyos, Life of Barbados was taken down by the Mutual (now Sagicor), BWIA was grounded by the Trinidad Government. If we want to think back that far Plantations Ltd. went in a long agonizing slide into oblivion. Now we have BS&T joining the ranks of companies that were once public.

Along with this slow dwindling, there is a scarcity of new companies going on to the exchange. Of course unless you count Sunbeach (we won’t go any further on that one). To make matters worse there’s an overwhelming tendancy for people to buy shares and then hold onto them for long term appreciation. So we have far more buyers than sellers. The mutual funds have added a new dimension but the returns (if you take out the BS&T takeover) have been pretty much moribund.

Merging the regional exchanges will buy time, however the fact of the matter is the investment arena in Barbados is pretty stagnant. If you listen to the rumour mill, the stories floating around about “back room deals” may or may not have substance, but they don’t engender confidence in smaller investors.

The management of the exchange must see the trends, and also must realise that from a long term view, if they do not take action they will be consigned to the same file folder that currently holds BS&T.

Marginal

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3 Comments »

  1. […] Notes From The Margin wonders if the Barbados Stock Exchange is becoming irrelevant. Posted by Janine Mendes-Franco Share This […]

    Pingback by Global Voices Online » Barbados: Taking Stock — April 8, 2008 @ 8:19 am | Reply

  2. Marginal:

    As usual, you have raised some interesting points, but there is much more that can be said. One of the problems faced by Barbados is that stock markets in very small countries face the dis-economies of very small size. You did not comment on the lack of congruence in the operating rules of the individual members of the Regional Stock Exchange, but the differences between Barbados and Trinidad and Tobago in the treatment of take-over operations led to a contentious issue between N&M and the BSE. This points to another nail in the CSME coffin – the difficulty of promoting the liberalisation of the capital market. Overall, I feel that the experience of the BS&T take over has set investment in equities in Barbados back by, say, ten years.

    Comment by Linchh — April 11, 2008 @ 3:56 am | Reply

  3. I think the whole BS&T saga has done tremendous damage to the investment climate in Barbados as far as equities are concerned. From the initial recommendation of the board to the whole mess with the differing stock exchange rules, the whole thing was a mess.

    Marginal

    Comment by notesfromthemargin — April 11, 2008 @ 10:13 am | Reply


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