Saturday, April 20, 2024

Bad decision to delist

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TRINIDAD AND TOBAGO CONGLOMERATE Massy Holdings’ decision to delist from the Barbados Stock Exchange (BSE) “spells trouble” for the local stock market.

Royal Fidelity Bank & Trust gave that assessment in a recent commentary on the issue, pointing out that “trading in Massy shares alone accounted for 20 per cent of total value in 2014, outdone only by trading of closely held Goddard shares”.

“We continue to hold our breath on possible future BSE listings as a result of governmental divestiture. The addition of these securities will certainly provide a boost to local trading, which will be made even more illiquid after the Massy Holdings proposal to its shareholders of voluntarily delisting from the exchange,” the investment company said.

“Some of the reasons the company gave for its proposed delisting from the BSE and moving to the Trinidad and Tobago Stock Exchange included the low level of local trading, the increasingly restrictive regulatory environment, and trading rules put in place in 2012 that require each listed security to have its own quantity of shares that must be traded in order to effect a price change.

“In the case of Massy, 6 500 shares must be traded in one order to move the price. At today’s price that represents $130 000 in a single trade. Hardly representative of average investor activity,” it added.

Royal Fidelity noted that 2014 “closed with the local and composite indices reporting double-digit losses of 28.6 per cent and 17.5 per cent respectively, with the cross-listed index showing gains of 14.7 per cent. Our fund had a reversal of last year’s earnings and closed 2014 with a loss of 6.96 per cent”.

The company said in this difficult environment it reallocated more of its resources to “international opportunities”, including those in the United States.

“We believe that this mix better positions the fund for 2015 and will help us shake off some of the previous year’s less than stellar performance,” it said. (SC)

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