The Com­pos­ite In­dex of the Trinidad and To­ba­go Stock Ex­change (TTSE) slumped by 7.11 per cent for the first six months of 2024, con­tin­u­ing a down­ward path that is now in its third year.

The Com­pos­ite In­dex, which com­pris­es 24 of the com­pa­nies list­ed on the TTSE, de­clined by 8.87 per cent in 2023 and 11.01 per cent in 2022.

For the year to Fri­day, which was the end of the sec­ond quar­ter of 2024, all five of the com­mer­cial banks list­ed on the TTSE, ex­pe­ri­enced de­clin­ing share prices, rang­ing be­tween 1.99 per cent, for First­Caribbean In­ter­na­tion­al Bank, re­cent­ly re­named CIBC Cana­da, to Ja­maica’s NCB Fi­nan­cial Group, which was down by 19.12 per cent for the six-month pe­ri­od, ac­cord­ing to Fri­day’s Wise week­ly re­port.

Two of the lo­cal stock ex­change’s three con­glom­er­ates were down, with Ja­maica’s GraceKennedy de­clin­ing by 17.81 per cent and Massy by 8.22 per cent. ANSA McAL’s stock was up by 14.69 per cent.

Of the sev­en man­u­fac­tur­ing stocks on the Com­pos­ite In­dex, five de­clined.

All four of the non-bank­ing fi­nan­cial com­pa­nies de­clined and one of the three trad­ing com­pa­nies were down.

The com­pa­ny per­form­ing best on the Com­pos­ite In­dex was Pres­tige Hold­ings which was up by 38.06 per cent, while the worst-per­form­ing com­pa­ny was NGL, which de­clined by 36.27 per cent.

In­sti­tu­tions ‘gun shy,’ says Per­me­ll

Asked to analyse the per­for­mance of the Com­pos­ite In­dex for the first half of 2024, mi­nor­i­ty share­hold­er rights ac­tivist, Pe­ter Per­me­ll, out­lined four fac­tors, which he said were not ex­haus­tive:

* The over­all malaise in the macro­eco­nom­ic en­vi­ron­ment;

* The wind­ing-up of the Cli­co In­vest­ment Fund (CIF) on the Jan­u­ary 2, 2023, meant that over 6,000 in­di­vid­u­als au­to­mat­i­cal­ly be­came Re­pub­lic Fi­nan­cial Hold­ings Ltd (RFHL) share­hold­ers. How­ev­er, in­ter­est­ing­ly, be­cause these per­sons were not the tra­di­tion­al stock mar­ket in­vestors and many of them are se­nior cit­i­zens who need cash for their dai­ly sur­vival and have a lim­it­ed in­vest­ment hori­zon, some of them have de­cid­ed to cash out of their RFHL shares at deeply dis­count­ed prices;

* An in­creas­ing num­ber of risk-averse re­tail in­vestors who ap­pear to have a pref­er­ence, some may even say a pen­chant, for Gov­ern­ment bonds and com­mer­cial pa­per which car­ry very lit­tle risk of loss of one’s cap­i­tal out­lay, but give com­par­a­tive­ly good rates of re­turns rel­a­tive to eq­ui­ties, which in­vari­ably car­ry greater risks for sim­i­lar type re­turns in the cur­rent en­vi­ron­ment. This was ev­i­dent based on the heav­i­ly over­sub­scribed 4.5 per cent, five-year NIF2 (Na­tion­al In­vest­ment Fund) bond is­sue, which list­ed on the TTSE on March 13;

* In­sti­tu­tion­al in­vestors, pen­sion funds in par­tic­u­lar, seem to be sit­ting on the side­lines ei­ther be­cause they are sim­ply “gun shy” or they may have ex­ceed­ed their statu­to­ry lim­its for in­vest­ment in the lo­cal stock mar­ket. As such, they are un­able to take ad­van­tage of the bar­gain stock prices that cur­rent­ly ex­ist; and

* A dearth of new in­vest­ment op­por­tu­ni­ties in the stock mar­ket in the form of ei­ther IPOs (ini­tial pub­lic of­fer­ings) or APOs (ad­di­tion­al pub­lic of­fer­ing) with the last APO be­ing the First Cit­i­zens APO in 2022. How­ev­er I am per­suad­ed that there is a gold­en op­por­tu­ni­ty in the short term for an IPO giv­en the ad­vent of the Trinidad and To­ba­go Mort­gage Bank (TTMB) as a re­sult of the merg­er of Trinidad and To­ba­go Mort­gage Fi­nance (TTMF) and the Home Mort­gage bank (HMB).

More re­tail in­vestors, says TTSE CEO

Asked to com­ment on the per­for­mance of the lo­cal stock mar­ket for the first six months of the year, CEO of the TTSE, Eva Mitchell, not­ed the de­cline in in­sti­tu­tion­al trad­ing ac­tiv­i­ty, as Per­me­ll did, but said there has been a no­table in­crease in re­tail in­vestor en­gage­ment.

“The will­ing­ness of re­tail in­vestors to par­tic­i­pate in the mar­ket in­creased in 2023 and has per­sist­ed in­to 2024. Cur­rent­ly, re­tail trades ac­count for 80 per cent of to­tal trades, up from 69 per cent in 2022,” said Mitchell.

“The syn­er­gy of so­cial me­dia and the im­proved ac­ces­si­bil­i­ty of the stock mar­ket through our dig­i­tal trad­ing plat­forms has not on­ly at­tract­ed new re­tail in­vestors but al­so reen­gaged those who were pre­vi­ous­ly in­ac­tive.

“As of May 2024, our TTSE On­line Trad­ing Plat­form has be­come a key com­po­nent of our stock mar­ket, han­dling an im­pres­sive 29 per cent of to­tal mar­ket trades for the month. This sta­tis­tic re­flects the grow­ing con­fi­dence in our dig­i­tal plat­forms, high­light­ing their re­li­a­bil­i­ty and ef­fec­tive­ness,” she said.

The TTSE chief ex­ec­u­tive said that even with a gen­er­al drop in stock mar­ket prices, the ma­jor­i­ty of com­pa­nies list­ed on the TTSE have con­sis­tent­ly raised their div­i­dends and many have re­port­ed high­er prof­its.

“Our lo­cal firms con­tin­ue to pay the high­est div­i­dends in the re­gion, pro­vid­ing many in­vestors with a valu­able source of pas­sive in­come. This trend high­lights the re­silience and growth po­ten­tial of the mar­ket, cre­at­ing a pos­i­tive en­vi­ron­ment for re­tail in­vestors and in­di­cat­ing mar­ket sta­bil­i­ty,” said Mitchell.

She said, in ad­di­tion, the TTSE is de­vel­op­ing a new prod­uct that will al­low lo­cal in­vestors to par­tic­i­pate in in­ter­na­tion­al mar­kets us­ing TT dol­lars on the Trinidad and To­ba­go Stock Ex­change.

Mitchell said this new prod­uct will con­tribute to mar­ket liq­uid­i­ty in T&T.

“This in­no­v­a­tive prod­uct will en­able lo­cal in­vestors to en­gage di­rect­ly with in­ter­na­tion­al mar­kets in TT-dol­lar terms, track­ing the per­for­mance of in­ter­na­tion­al in­dices through the TTSE. We are work­ing close­ly with reg­u­la­to­ry au­thor­i­ties to en­sure the smooth in­te­gra­tion and im­ple­men­ta­tion of this prod­uct, align­ing with our com­mit­ment to na­tion­al de­vel­op­ment,” she said.

Reg­u­la­to­ry changes

Mitchell al­so said the TTSE has been proac­tive in im­ple­ment­ing reg­u­la­to­ry changes to en­hance mar­ket ef­fi­cien­cy and sta­bil­i­ty. She said the re­cent up­dates in­clude a new clos­ing price method­ol­o­gy, re­duc­ing the set­tle­ment pe­ri­od from three days to two days and plans to ex­tend trad­ing hours in the near fu­ture to sup­port mar­ket de­vel­op­ment and ef­fi­cien­cy.

“We are con­tin­u­ous­ly im­prov­ing our rules to gov­ern the stock ex­change, hav­ing un­der­tak­en a com­pre­hen­sive re­view of our TTSE Rule Book to cre­ate a more ef­fi­cient and at­trac­tive mar­ket­place for in­vestors, list­ed com­pa­nies, and bro­kers alike,” the ex­ec­u­tive said.

She point­ed out that the TTSE Cap­i­tal Mar­kets Con­fer­ence for 2024 aims to fos­ter and strength­en both new and es­tab­lished con­nec­tions while en­hanc­ing brand vis­i­bil­i­ty. She said the event will bring to­geth­er promi­nent fig­ures in fi­nance, trade and in­vest­ment from around the world. The con­fer­ence’s theme and pan­el dis­cus­sions are aligned with our 2024 TTSE and TT Cen­tral De­pos­i­to­ry ob­jec­tives. This year’s con­fer­ence theme un­der­scores our ef­forts to ex­pand, evolve and di­ver­si­fy cap­i­tal mar­kets, Mitchell said.

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