Should there be a Caribbean Stock Exchange? And how would that even work?
I’m Kalilah Enriquez Reynolds, Founder and CEO of Money Media, money made simple.
The Caribbean Private Sector Organisation has picked PricewaterhouseCoopers (PwC) to conduct a study to determine if a regional stock exchange could actually work.
The idea of a Caribbean stock exchange has been around for years now. The thought is that Caribbean countries are too small on their own to have a truly liquid and robust market.
With one regional exchange, companies from across the region could list their shares on a central market. This would not only give businesses a larger pool of potential investors, but also make it easier for companies to grow and expand into different territories.
But realistically, there are a lot of hurdles to clear first.
Here’s what Taking Stock analyst David Rose had to say.
“Jamaica, Trinidad and Barbados, based on their economic models and setups, have deeper capital interest by different investors. So they can sell on their own as relative giants in their spheres,” he explained.
“But, for example, the Eastern Caribbean shares the Eastern Caribbean dollar, and they share an Eastern Caribbean stock market. Guyana has a market that’s only open on Mondays, and that’s probably three hours good and on top of that, there are just other considerations that people need to consider,” he added.
He also explained that different countries have different currencies and settling times, so settling trades across borders could be tricky.
Then you’re also talking about different governments and different regulations.
For instance, in Jamaica, the process for share buy-backs is much quicker than in Trinidad. There, the process can take months because of their specific rules.
There’s also the challenge of political will. Other attempts at regional integration and cooperation have failed before. For example, the Caribbean Single Market and Economy (CSME) was established in 2001, and many would argue that the Caribbean still does not have a single market, and most certainly not a single economy.
But the biggest hurdle will probably be the lack of a single currency. Some countries have fixed exchange rates like Belize and Barbados, both pegged at 2 to 1 USD. While others, like Jamaica and Guyana, have floating currencies. Jamaica is currently 160 to 1 US, while Guyana is at 200 to 1. Which rate or which currency would we use to settle transactions? Because TT dollars have no use for me in Jamaica and vice versa. Or do we use the US dollar, which opens up problems about availability of USD? Or what about Bitcoin? See the problem?
So, without strong commitment from leaders, a regional stock exchange might never get off the ground. But that’s what the PwC study will look at. All these issues will be considered, and they’ll suggest the best ways forward.
I’d love to see it happen, but am I optimistic? Unfortunately, no.
And that’s the bottom line.
