The Guyana Government is prepared to support the modernisation of the Guyana Stock Exchange (GSE), but in the same breath, it has reminded that it is a privately-owned mechanism.
Vice President, Dr Bharrat Jagdeo took this position during his Thursday press conference amid recent calls from the private sector and Opposition for the Stock Exchange to be modernized.
While Government is committed to ensure that it is revamped, he added that the onus is also on the stakeholders to do their part.
He pointed out the introduction of the Securities Industry Act, which provides for the registration of securities brokers and dealers, certain self-regulatory organizations, and certain issuers of securities; and for the regulation of securities issuances; with the purpose of encouraging capital formation and the growth of efficient securities markets, while protecting purchases of securities and promoting ethical behavior in the securities industry.
“The stock exchange is a self-regulatory organisation. It’s privately owned in Guyana, like in many parts of the world. It is not owned by the Government. The Government passed supporting legislation that people have to comply with in managing the exchange and participants on the exchange.”
He added, “We’re prepared to modernize this but it is now owned by the Government of Guyana. Lamenting the fact that we’re not giving them money and all kinds of stuff, the government is supplementing the exchange and is prepared to give more to modernized but if you’ve got an old computer, buy yourself a new computer.”
Public companies with the stock exchange market are Banks DIH, Caribbean Containers, Citizen’s Bank, Demerara Bank, Demerara Distillers Ltd, Demerara Tobacco Company, Guyana Bank for Trade and Industry (GBTI), Guyana Stockfeeds In, JP Santos and Sons, Property Holdings Inc, Republic Bank Ltd, Rupununi Development Company Ltd and Sterling Products Limited.
Once listed publicly on the exchange, Jagdeo contended that share prices would grow in accordance with the company’s profitability and dividend policy.
However, a big problem in the country is that many companies are private, owing to the greater level of scrutiny attached to being listed publicly.
Not listed on exchange
The Vice President noted, “In Guyana’s case, the first thing is that we don’t have a large share volume…Even now, the public companies are not listed on the exchange because there is a greater level of scrutiny over your accounts. They are trading through the exchange but they don’t pay a fee. It requires higher level of scrutiny over your account and regular publishing of the accounts. A lot of private companies don’t want to go public because they’re afraid of this.”
A few days ago, the Georgetown Chamber of Commerce and Industry (GCCI) called for an overhaul of the Guyana Stock Exchange, after highlighting the negatives of current operations and its effect on the business community.
With access to financing being a leading hurdle for many businesses in Guyana, GCCI said, GSE has a significant role to play in facilitating a transparent and efficient marketplace for companies to raise capital, invest, and grow.
In a statement, the Chamber noted the lack of necessary infrastructure, technological advancements, and regulatory framework at the GSE, which compromise the financial health of businesses, restrict their ability to attract investment, and ultimately hamper their growth potential.
A stock market allows owners of stocks and shares to dispose of them at a fair price. It allows new investors to buy them at a fair price, and it allows companies to sell new shares to finance the growth of their business.
The Guyana Association of Securities Companies is the local stock exchange that organises and supervises the stock market in Guyana.
On Friday last, during his contribution to the 2024 Budget Debate, Opposition Leader Aubrey Norton had also called for the rollout of comprehensive financial literacy programmes and the development of the local stock exchange market.