Ashford W. Meikle, Business Reporter

Opposition Leader Bruce Golding has criticised regional stock markets for their limited contribution to the economies of the English-speaking Caribbean and for the limited range of options, saying a regional stock exchange was "a long way off."

"I am disappointed at the little use that has been made of the market in raising capital for new investments rather than merely being a market for buying and selling existing stocks," said Golding at the Jamaica Stock Exchange's second annual regional conference on capital markets at the Ritz-Carlton Hotel in Montego Bay.

The Opposition Leader, in support of his argument, quoted Trinidad and Tobago's Central Bank governor, who noted that while the regional stock exchanges have handsomely rewarded a very small group of investors, they have had a marginal impact on the region's economic development.

Although there are three main exchanges in the Caribbean, located in Jamaica, Trinidad, and Barbados, the combined number of listed companies - just over 100, with 11 cross-listed - is considered small and vulnerable compared to their counterparts in developed economies.

Low liquidity, turnover

Golding made a point of this, noting that the regional markets are characterised by low liquidity and low turnover.

"The small size of the markets exposes them to volatility because of the disproportionate impact that one or two large companies can have on the overall performance of the market," he said.

Acknowledging that smaller companies were discouraged from listing because of the cost and complexity of a standard listing, the Opposition Leader argued that governments must step up to the bat in fostering an expanded capital market.

Jamaica's Government could encourage the process by offering special tax incentives for such companies, and help to expand the

market "by listing profitable government companies such as the Port Authority of Jamaica and the Petroleum Corporation of Jamaica as well allowing government debt instruments to be traded on the stock exchange."

Golding argued that the creation of a regional stock exchange would lead to real growth and a more lasting commitment to regional integration as envisaged in the Revised Treaty of Chaguaramas.

"It would create a larger, more dynamic market offering much greater investment options and allow investors to diversify their portfolios regionally," he said.

"It would provide a larger pool of current and potential stockholders, greater security for the less adventurous investors and would encourage more savers to consider equities as an attractive option."

But, Golding said, before that can be achieved, there must be a harmonisation of the macroeconomic programmes of Caribbean governments, specifically as it relates to fiscal and monetary policies, taxation, incentives and debt management.

"I seriously doubt that the policies informing the preparation of the budget [by Finance Minister Dr. Omar Davies] are being benchmarked against any agreed parameters that are designed to secure greater macro-economic convergence among the member countries of the CSME. Nor do I believe that any other finance Minster in the region is guided by any such objective," he said.

The JSE conference continued yesterday with a series of panel discussions led by local and foreign capital market experts.

It ends today.

ashford.meikle@gleanerjm.com