IN?RESPONSE to the question, one is inclined to ponder whether there is in fact evidence of any weakened or smouldering investor confidence and, if indeed such does exist, whether the burden of such responsibility could accurately be attributed to actions associated with the ultimate demise of CLICO.
In small developing states such as Barbados, public response to any adverse fiscal intrusion, whether in the private or public sector, is met, if at all, with a delayed reaction of any kind.
Herein is the difference between developed and developing countries, where reaction is virtually spontaneous.
One only has to call to mind the events of January 21, 2008, when President George W. Bush secured legislative sanction to provide some stimulus to the sagging United States economy.
International reaction was swift, as stock prices on European and Asian markets plunged by almost five per cent in Japan and nine-and-a-half per cent in Singapore.
The underlying cause of this dramatic collapse in market confidence was rooted in the widespread perception that resorting to a stimulus package sent a clear warning that an international recession was on the horizon.
Furthermore the international community feared that even a stimulus package may be insufficient to ward off a recession in the world’s largest economy and, by extension, the world at large.
However, when knowledge surfaced that CLICO was in imminent financial collapse, initial public reaction focused on the plight of policyholders and those whose investments seemed under severe threat.
Reminiscing on the aftermath of the financial failure of another Trinidad entity some years ago, concern mounted with the mantra “another Trade Confirmers?”
Recognizing the sustained public disquiet, several legal and other technical formulae were posited seemingly to reassure CLICO staff, policyholders and investors that somehow the local operation was isolated from the ills befalling its Trinidad parent and that in the fullness of time there would be some measure of comfort and relief for all concerned.
This assurance was buttressed by way of a communication from CLICO Life that with the declared Government support, “there will be no loss of their investment in the company”.
Having regard to all that has been led and said in relation to the misfortunes of CLICO, it would be less than charitable to claim that there has been any real fallout in investor confidence that should be refurbished and restored.
However, one must not mention shareholder confidence in the same breath as public interest in obtaining the best income return on their savings.
A recent call by Prime Minister Freundel Stuart for persons to embrace wealth creation might have received a temporary setback with removal of the incentive income tax allowances accorded to certain investments – a regurgitation of the austerity measures of the 1990s.
That apart, it is indeed heartening to record that during the last 26 months there have been 16 issues of local Government stock, all of which have been fully subscribed within the shortest period of time.
