Capital markets –the essence

Oct 15, 2024 Features / Columnists, The GHK Lall Column

Kaieteur News – Managing Direction of the Jamaica Stock Exchange (JSE), Dr. Marlene Street Forrest certainly wowed Guyanese with her presentation on the elements of a functioning Capital Markets. So, too, did Chairman of the JSE, Steven Whittingham. The gathering arranged by Guyana’s Chamber of Commerce and Industry (GCCI) pulled out the stops and attracted the presence of a noted American investment bank, Jefferies Private Wealth Management. As big guns go, the GCCI must be commended for bringing such a galaxy of fine, upstanding folks to these shores. They had a lot to say about Capital Markets, of which so much more needs to be known here.

I nodded in appreciation on reading about transparency, accountability, and investor education from Dr. Street Forrest (KN, October 10, 2024). It was well said and well received. Chairman Wittingham was pointed in saying that “successful economies are not built solely on natural resources. They are built by successful companies and successful companies need capital. Guyana is at a crossroads. It’s a land of opportunity, but you must tread carefully.” A wide brimmed Stetson is doffed to the chairman. Meanwhile, CEO of NCB Capital Markets Ltd, Angus Young weighed in with, “The broker dealer will also bring fresh capital from the region into Guyana as investors seek to participate in the fastest growing economy in the world.” He continued: “Guyana is at the defining moment in its history.” Thanks to all visitors and contributors for their all-around sober, but also rousing, remarks. Guyana is the place to be in these the early days of a sustained capital markets development push. Here is where it could, should, happen. Must happen, and everyone said the right things. Capital markets, which are about raising funds for corporations getting off the ground, expanding, developing quicker. Equity markets. Debt markets.

And, if I may be permitted, the derivative markets that can be skillfully utilized by the sophisticated to bolster the strategies and visions of company execs and planners. A word of caution is timely: only the sophisticated and the prudently bold in the derivative markets, which can go from boon to bomb in less than an instant. But there was something missing from the presentations, which could be the call of the media in not highlighting. Or because it was not emphasized as it should have been. In fact, there are two essences, two imperatives that ought to have been woven into contributions that struck rich chords.

The first is trust. Trust is priceless. Capital markets live and die, flourish or perish, on that intangible called trust. When trust is lost, the best capital markets seize up, grind to a halt. Revisit the US of 2008, which stands as a more recent example of the incineration of trust, when regulators failed at their duty, and insatiable greed was allowed to run amok. As much as it is detested, the negative must be interjected, if only for the warning value. As most Guyanese who are honest will admit, trust is a scarce to nonexistent commodity in this country. Political trust. Corporate trust. Social trust. Civic trust. Citizen trust. Are these not some of the crucial components that would be key presences in the local environment, which should form the bedrock of any viable capital markets? On every occasion, I say ‘yes.’

Another attendee at the GCCI event, Mr. Gregory Fisher of US-based Jefferies Private Wealth Management, should have plenty to lay on the table about the sacred nature of trust for any capital markets to prosper beyond the initial euphoria. He would be more equipped than most to instill into Guyanese that trust in any Guyana Capital Markets would lead to the strengthening and sustaining of investor trust. For the investor confidence that’s so paramount, as some leading political heavyweights have sounded off on, but of which they haven’t the faintest clue what that represents through and through. Dr. Street Forrest rightly spotlighted investor education, but investor trust, though a byproduct of investor education, still takes precedence. Meaning that from the regulator to the regulated, be they individuals or companies or groups, all must operate on a level playing field, and with all the other comforting things of which she spoke so well. It was Chairman Whittingham who spoke intelligently of the role of natural resources and its proper place. Still, the highest place is reserved for the human element that fuels and could drive vibrant and credible capital markets in Guyana. When that trusted human element occupies untainted grounds, then Guyana’s capital markets, with that trusted people presence and their contributions, could takeoff. If trust is as skimpy and shadowy as is now the norm in this country, then all that the great Guyana natural resource underpinnings would do is provide a platform that showcases the lengthy scaly underbelly of this society. Considerable challenges stand ahead in building a modicum of trust. Key drivers would be sustained, honest efforts from credible participants. (The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)