PE­TER CHRISTO­PHER

Once again, the Trinidad and To­ba­go Stock Ex­change (TTSE) en­dured a chal­leng­ing year, but com­pa­ny’s CEO Eva Mitchell is hope­ful that 2025 will bring bet­ter re­turns than 2024.

The Com­pos­ite In­dex of the TTSE, which in­cludes T&T com­pa­nies and re­gion­al com­pa­nies cross-list­ed on the lo­cal mar­ket, de­clined by 11 per cent in 2022, 8.8 per cent in 2023 and about 11.6 per cent. Over the three-year pe­ri­od, the Com­pos­ite In­dex de­clined by about 28 per cet.

She ex­plained that much of the strug­gles faced by the lo­cal stock mar­ket in the past three years have been re­lat­ed to sev­er­al macro­eco­nom­ic and mar­ket-spe­cif­ic fac­tors.

Sev­er­al of these are tied to the lin­ger­ing ef­fects of the COVID-19 pan­dem­ic; in­fla­tion­ary pres­sures and glob­al eco­nom­ic un­cer­tain­ty that has im­pact­ed in­vestor sen­ti­ment.

She stressed that low­er liq­uid­i­ty as a re­sult of these chal­lenges im­pact­ed the mar­ket due to de­creased par­tic­i­pa­tion by in­sti­tu­tion­al in­vestors.

“In 2024 we saw less liq­uid­i­ty in the sys­tem. This would have been a re­sult of the re­duced amount of par­tic­i­pa­tion by in­sti­tu­tion­al in­vestors as their sen­ti­ment sort of shift­ed in 2024 caus­ing low­er trad­ing vol­umes. That was a func­tion of a num­ber of dif­fer­ent things. If you look at our bond yield en­vi­ron­ment or bond in­ter­est rates en­vi­ron­ment, that en­vi­ron­ment was ac­tu­al­ly at­trac­tive in 2024 be­cause we saw some up­ward move­ment in bond yields, specif­i­cal­ly on the short­er end of the curve. And bond yields and the stock mar­ket have an in­verse re­la­tion­ship. So, if bond yields go up, stock mar­ket prices go down or tend to go down. So you would have seen that ac­tu­al­ly trans­late in our per­for­mance in 2023/2024,” she told the Sun­day Busi­ness Guardian in an in­ter­view at her of­fice in the Nicholas Tow­er in down­town Port-of-Spain last Wednes­day.

She ex­plained that while a de­cline in mar­ket cap­i­tal­i­sa­tion would rep­re­sent a pa­per loss for in­vestors and would af­fect port­fo­lio val­ues, it should be not­ed that re­alised loss­es oc­cur on­ly if in­vestors sell at low­er prices. She ex­plained that long-term in­vestors con­tin­ue to ben­e­fit from div­i­dends and po­ten­tial price re­cov­er­ies.

De­spite 2024 be­ing an­oth­er year of de­cline, Mitchell is ex­pec­tant there will be a turn­ing point in the short to medi­um term.

“Let’s look at the op­por­tu­ni­ty in the mar­kets. I think now, even though the mar­ket has been on a de­cline over the last two to three years, stock mar­kets nat­u­ral­ly get to a point where they bot­tom off, and then they shift. And I think now is a time when that shift will hap­pen. So, I en­cour­age in­vestors, both in­sti­tu­tion­al and re­tail in­vestors, to take ad­van­tage of the op­por­tu­ni­ties now with any stock mar­ket,” said Mitchell, who al­so not­ed that de­spite the drop off in in­vest­ments the per­for­mance of com­pa­nies list­ed on the mar­ket was large­ly pos­i­tive.

She said, “If you look at our com­pa­nies that are list­ed on our stock mar­ket, they are com­pa­nies that cre­ate or of­fer im­mense val­ue to share­hold­ers. These com­pa­nies have con­sis­tent­ly re­port­ed prof­its, and these com­pa­nies have con­sis­tent­ly re­ward­ed their in­vestors or their share­hold­ers by way of div­i­dends. So even though bond yields at this point in time are ba­si­cal­ly on par with div­i­dend yields that are paid on the stock mar­ket, I think from a long-term per­spec­tive, the share­hold­er or the stock mar­ket in­vestor will ben­e­fit, par­tic­u­lar­ly as stock prices are low. I now see a shift is im­mi­nent in the sys­tem.”

SME fo­cus

Mitchell not­ed that the TTSE has con­tin­ued to do sig­nif­i­cant work to cre­ate a con­ducive en­vi­ron­ment for Small and Medi­um-sized En­ter­pris­es (SME) list­ings. In 2024, the TTSE signed Mem­o­ran­dums of Un­der­stand­ing with both the Trinidad and To­ba­go Cham­ber of In­dus­try and Com­merce and the T&T Man­u­fac­tur­ers As­so­ci­a­tion to cre­ate pro­grammes geared to­wards SMEs to pre­pare those busi­ness­es to get list­ed on the TTSE. Sep­tem­ber 2024 saw Er­ic So­lis Mar­ket­ing be­come on­ly the third SME list­ed on the TTSE and the first such list­ed since De­cem­ber 2019.

The ini­tial pub­lic of­fer­ing (IPO) for So­lis was over­sub­scribed in Au­gust ahead of its list­ing.

“The Stock Ex­change has done a sig­nif­i­cant amount of work to cre­ate that con­ducive en­vi­ron­ment for SME list­ing. So the So­lis list­ing was just one of many that we ex­pect to come on the ex­change. We have been talk­ing to a lot of po­ten­tial SMEs. We have been work­ing with our val­ued part­ners,” said Mitchell, re­fer­ring to the part­ner­ships with the TTMA and TTCIC.

She said the ob­jec­tive is to raise aware­ness of the ben­e­fits to SMEs of list­ing on the lo­cal stock mar­ket, in­clud­ing be­ing able to ac­cess the fund­ing that they need to grow their com­pa­ny and pro­vid­ing al­ter­na­tives, rather than debt fi­nanc­ing.

“We ex­pect to see more of those list­ings this year, be­cause some con­ver­sa­tions are much warmer than oth­ers with our po­ten­tial SME list­ings. So, ex­pect to see some IPO ac­tiv­i­ty this year, and it’s some­thing that we ex­pect to con­tin­ue go­ing for­ward.”

She said while there had been de­clines in the mar­ket for the past three years, re­tail in­vestors con­tin­ued to main­tain an in­ter­est in the lo­cal stock mar­ket.

The TTSE CEO said head­ing in­to 2025, there would be a con­tin­ued fo­cus on ed­u­ca­tion so that in­vestor aware­ness and con­fi­dence in the mar­ket would in­crease.

“In 2024, we put a lot of fo­cus and ef­fort around in­vestor ed­u­ca­tion, and that’s some­thing that we’re go­ing to ac­cel­er­ate again in 2025. One of our ob­jec­tives is to try to in­crease the in­vestor par­tic­i­pa­tion of the work­ing pop­u­la­tion, and to do that aware­ness is im­por­tant. So we are go­ing to con­tin­ue to speak to busi­ness­es, speak to in­di­vid­u­als, host our sem­i­nars, our we­bi­na­rs, in­form­ing the mar­kets about what and how to build fi­nan­cial wealth us­ing the stock mar­ket. So that’s some­thing that we’re go­ing to con­tin­ue in 2025,” said Mitchell, who ac­knowl­edged that the Wiz­dom­CRM Vir­tu­al Stock Mar­ket Game did have a pos­i­tive im­pact on in­vestor be­hav­iour in the coun­try.

“I think every­thing that we’re do­ing in terms of in­vestor ed­u­ca­tion has con­tributed to the re­sults that we are see­ing in in­vestor par­tic­i­pa­tion, in re­tail in­vestor par­tic­i­pa­tion, be­cause those chan­nels di­rect­ly tar­get re­tail in­vestors. As I said be­fore, we have seen an uptick in the num­ber of re­tail in­vestor ac­counts that have been opened over the last two to three years since we start­ed ac­cel­er­at­ing our in­vestor ed­u­ca­tion pro­grams. As a mat­ter of fact, over the last 10 years, we’ve seen a 60 per cent in­crease in the num­ber of re­tail in­vestor ac­counts with­in the de­pos­i­to­ry. So we’re cer­tain­ly head­ing in the right di­rec­tion,” she said.

Pro­posed fee hike

Mitchell how­ev­er was diplo­mat­ic in the face of a pro­pos­al by the TT Se­cu­ri­ties Ex­change Com­mis­sion to triple the fees paid by many mar­ket par­tic­i­pants, in­clud­ing the TTSE.

She said, “The Stock Ex­change rec­og­nizes the im­por­tance of hav­ing that reg­u­la­to­ry over­sight in the mar­ket. How­ev­er, we do be­lieve that any in­creas­es in stock mar­ket fees, or any reg­u­la­to­ry fee in­crease that hap­pens at this point must be done with a bal­anced ap­proach that sup­ports the wider de­vel­op­ment of the stock mar­ket and the growth of the stock mar­ket. But at this time, we will con­tin­ue to en­gage with the SEC or the ul­ti­mate reg­u­la­tor to find that bal­anced ap­proach, to en­sure that what­ev­er strat­e­gy or what­ev­er ap­proach is used is some­thing that sup­ports the in­tegri­ty and growth of the mar­ket.”

 Mitchell added the TTSE was still en­gag­ing stake­hold­ers con­cern­ing the mar­ket-mak­ing pro­pos­al which she sig­nalled i in 2022. She stat­ed it re­mained a strate­gic ini­tia­tive, as it can en­hance liq­uid­i­ty and price dis­cov­ery in the mar­ket.