Capital Markets
From The Report: Trinidad & Tobago 2018
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Economic growth is expected to gather speed in 2018 and 2019, and the Trinidad and Tobago Stock Exchange could benefit through higher share prices and more players becoming involved with the exchange. Even if T&T’s road to economic recovery is long, companies with a healthy cash flow have the option to return a higher percentage of their earnings to shareholders. Increasing dividend pay-out ratios would defend the yields earned by investors in a difficult economic environment. New tax measures may offset incremental economic growth in the near term, however, and affect the earnings of the country’s listed companies. In FY 2018 a change was implemented to the tax regime that subjects companies earning over TT$1m ($148,300) per year to a marginal tax rate of 30%, up from 25%. This increase could deflate the impact of companies on the Composite Index by a few percentage points. This chapter includes an interview with Hadyn Gittens, CEO, Trinidad and Tobago Securities and Exchange Commission; and a viewpoint by Gregory N Hill, Managing Director, ANSA Merchant Bank.

Articles from this Chapter

Overview

Steady does it: Activity remains largely stagnant, but encouraging results are seen in energy stocks and cross-listed securities
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Established nearly 40 years ago in 1981, the Trinidad and Tobago Stock Exchange (TTSE) grew in the 1980s and 1990s in part through the government advocating for local ownership of the country’s manufacturing firms, banks and conglomerates though pension and mutual funds. Over the past 37 years the TTSE has evolved alongside changing regulatory frameworks and technologies, but continues to be affected by an absence of sufficient liquidity. Like many bourses in the Caribbean, the TTSE is…

Analysis

One for the team: Market players advocate lower transaction costs to boost trading levels and, by extension, liquidity on the bourse
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The Trinidad and Tobago Stock Exchange (TTSE), established in 1981 under the Securities Industry Act, is the centre of capital market activity in the twin-island nation. The Ministry of Finance overhauled regulations governing the TTSE in the mid-1990s by composing the Securities Industry Act of 1995, which created the Securities and Exchange Commission. The law was then revised a second time to introduce the Securities Act of 2012, the current market rulebook. The TTSE lists many of the…

Interview

State of play: Hadyn Gittens, CEO, Trinidad and Tobago Securities and Exchange Commission (TTSEC), on improving regulations and dealing with excess liquidity
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Interview:Hadyn Gittens What measures have been taken to raise the regulatory standards of capital markets? HADYN GITTENS: A number of steps have been taken in the ongoing process of continually improving the standard of regulation. The TTSEC has maintained a long-standing relationship with the International Organisation of Securities Commissions (IOSCO), the governing body for securities regulators around the globe. In addition to being guided by IOSCO principles, the TTSEC also benefits…

Viewpoint

Situation report: Gregory N Hill, Managing Director, ANSA Merchant Bank, on the future of capital markets in emerging economies
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Viewpoint:Gregory N Hill The development of capital markets in nascent frontier economies is a slow process. At the heart of it, market transactions require a degree of trust, which prevents adoption from taking root quickly. Regulations need to be transparent, concise and well understood, while tax structures have to promote risk-taking and entrepreneurship. Meeting these requirements means that market participants have to work towards a common goal; a slow process at the best of times. Therefore,…

Analysis

Debt markets: Government borrowing is fuelling the segment
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Capital market debt issuances out of Trinidad and Tobago remain relatively flat year-on-year. After a peak performance in 2016, when 25 issues raised $13.5bn, the primary market generated an approximate $12bn in 2017 across 27 issues, and a further $12bn in the first eight months of 2018. Debt issues in the country have predominantly stemmed from the energy, financial services and telecommunications industries. The public sector remains the dominant borrower, with the central government, its agencies and state-owned enterprises coming to the market most frequently. Energy & State Debt Growth in the value of the debt market since…

Analysis

Alternative investments: Investor education remains the primary hurdle to growth
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Local capital market investors have long been painted with a broad brush and stereotyped as being conservative and risk averse. Although a segment of the market does tend to have a low risk tolerance and while the market-wide appetite for volatility may be lower than the global average, generalising market participants thwarts the development of different asset classes. Making A Case Alternative investments, such as venture capital, real estate investment trusts (REITs), distressed debt, asset-backed securities and structured products, continue to see their share in the market shrink due to the perceived risks of these assets. While…

Analysis

Growing participation: Widening the investor pool is key to development
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Vibrant capital markets generally rely on two critical ingredients: a comprehensive regulatory framework and a wide investor base. The Trinidad and Tobago Securities Exchange Commission, in conjunction with market participants, has made considerable strides in addressing the first of these elements over the past two decades, though certain shortfalls remain. The second ingredient, however, continues to elude. Current Players Market participation in T&T, as measured by active brokerage accounts, is less than 1% of the adult population. This compares poorly to other frontier and emerging economies where, through concerted efforts,…

Analysis

Active custodians: Institutional investors should exercise more control over firms
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Investors in the local capital market generally tend to remain silent through years, and sometimes decades, of underperformance, poor governance and a lack of transparency from their investee companies. Market participants in frontier economies such as Trinidad and Tobago typically lack the sophistication of their peers in developed countries, which see institutional investors play the role of active market custodians and keep listed companies in line. Nevertheless, despite weak minority…