Ex­pect an im­proved eco­nom­ic per­for­mance over the next six to 12 months pre­dicts Sar­o­dh Ramkhelawan, ex­ec­u­tive di­rec­tor and chief in­vest­ment of­fi­cer at Bourse Se­cu­ri­ties.

Even as the In­ter­na­tion­al Mon­e­tary Fund is warn­ing of one of the worst re­ces­sion to hit the world in 50 years is about to oc­cur, Ramkhelawan ar­gued that T&T is emerg­ing from a very tough po­si­tion and with our ma­jor agen­da dri­vers like oil and nat­ur­al gas prices strong, there should be growth and it should al­so spur in­vestor con­fi­dence in the lo­cal stock mar­ket.

“Bar­ring some very sig­nif­i­cant turn­around in the en­er­gy mar­kets we should have pos­i­tive GDP growth in the econ­o­my. And of course, we anx­ious­ly await the bud­get speech which is some­time in Sep­tem­ber/Oc­to­ber and I think that cre­ates a feel-good fac­tor for in­vestors. That may be tem­pered to some ex­tent by pro­nounce­ments from the state lev­el, yes, we are re­ceiv­ing an en­er­gy wind­fall, but we are com­ing out of a very dif­fi­cult place over the past cou­ple of years, but gen­er­al­ly I think, the en­er­gy wind­fall and that trick­le down ef­fect to the wider econ­o­my could spur a bit of con­sumer spend­ing. It may be off­set a bit by the ris­ing cost of liv­ing with in­fla­tion par­tic­u­lar­ly erod­ing pur­chas­ing pow­er, but gen­er­al­ly there seems to be a bet­ter in­vestor sen­ti­ment based on the cur­rent en­er­gy en­vi­ron­ment,” he posit­ed.

Ramkhelawan said based on the cur­rent en­vi­ron­ment he sees con­tin­ued strong en­er­gy prices through at least the next six months.

In an in­ter­view with the Busi­ness Guardian, Ramkhelawan ex­plained while glob­al stock mar­kets have been bear­ish he has al­ready seen signs that there is some set­tling glob­al­ly and Bourse was pre­dict­ing a high­er stock mar­ket by the end of the year.

“I think, cer­tain­ly at the in­ter­na­tion­al lev­el in the next six months to maybe a year it will be high­er than where we cur­rent­ly are. I can’t say how much high­er, but the tone and the in­vestor sen­ti­ment is start­ing to shift it would seem. So I think there’s pos­i­tive mo­men­tum build­ing. The sec­ond ques­tion is with re­spect to stocks, in the lo­cal mar­ket you’re talk­ing about?

So we ac­tu­al­ly like First Caribbean In­ter­na­tion­al for the rea­son that it’s prob­a­bly the most at­trac­tive­ly val­ued bank­ing stock, it’s one of the largest re­gion­al fi­nan­cial ser­vices firms op­er­at­ing across the Caribbean. Three, it pays an at­trac­tive div­i­dend yield north of five per cent. And four, it is a TT dol­lar as­set that ac­tu­al­ly pays div­i­dends in US dol­lars. So that serves as an at­trac­tive val­ue propo­si­tion for in­vestors,” Ramkhelawan told the BG.

He al­so posit­ed that the TTNGL stock may be a good in­vest­ment with the en­er­gy out­look pos­i­tive and the at­tempts by its un­der­ly­ing as­set, Phoenix Park Gas Proces­sors Lim­it­ed, to di­ver­si­fy in­ter­na­tion­al­ly with ac­qui­si­tions in US.

“So they have been look­ing at long-term growth out­side of Trinidad and To­ba­go, which may be con­strained a bit giv­en our en­er­gy pro­duc­tion woes but cer­tain­ly TTNGL is be­ing very pro­gres­sive through their in­vestee com­pa­ny and di­ver­si­fy­ing in­ter­na­tion­al­ly,” Ramkhelawan point­ed out.

He ar­gued that the T&T stock mar­ket has been per­form­ing bet­ter than some of the in­ter­na­tion­al play­ers. Ac­cord­ing to Ramkhelawan the T&T in­dex, which is our lo­cal­ly list­ed home­grown com­pa­nies, at June was down just about 2.4 per cent on av­er­age.

“So when we com­pare that to the Stan­dard and Poor’s in­dex, for ex­am­ple, be­ing down about 20 per cent notwith­stand­ing the fair­ly sig­nif­i­cant chal­lenges across the en­tire glob­al econ­o­my and glob­al fi­nan­cial mar­kets, I think in that con­text it wasn’t a bad per­for­mance so far.

“The com­pos­ite in­dex, which al­so in­cludes the cross-list­ed com­pa­nies that’s down about sev­en and a half per cent. And that was re­al­ly dri­ven by a ma­jor de­cline by cross list­ed com­pa­nies such as NCB Fi­nan­cial Group, First Caribbean In­ter­na­tion­al, and some of the oth­ers which col­lec­tive­ly were down on an av­er­age of 21.1 per cent. So, re­gion­al­ly there has been a bit of weak­ness, but with re­spect to home­grown com­pa­nies, they have held their own in a very chal­leng­ing en­vi­ron­ment,” Ramkhelawan told BG.

He said the bet­ter per­for­mance by the T&T fi­nan­cial sec­tor com­pared to oth­er re­gion­al fi­nan­cial in­sti­tu­tions may be as a re­sult of many things in­clud­ing com­pa­ny lever­age, re­turns on as­sets, re­turn on eq­ui­ty and val­u­a­tion lev­els across the bank­ing sec­tor stocks.

In re­la­tion to First Cit­i­zens Group’s re­cent ad­di­tion­al pub­lic of­fer­ing, Ramkhelawan said he was not sur­prised by the in­ter­est in the stock be­cause bank­ing rep­re­sents the largest sec­tor on the T&T Stock ex­change, ac­count­ing for over 50 per cent of the to­tal val­ue of all the stocks on the TTSE so it is a nat­ur­al at­trac­tion, par­tic­u­lar­ly for in­sti­tu­tion­al in­vestors and in­di­vid­ual in­vestors as well.

“When you think about banks, you think sta­bil­i­ty, you think strength and while it’s not cer­tain­ty, there’s a high­er de­gree of sta­bil­i­ty as men­tioned in terms of the op­er­at­ing en­vi­ron­ment. I think that First Cit­i­zens, the cor­rec­tion in price re­al­ly in some ways is in sim­i­lar fash­ion to maybe NCB, would have been a ra­tio­nal­i­sa­tion of what the stock might be worth. It’s come to a lev­el. That $50 price while it’s not nec­es­sar­i­ly a steal of a deal but it’s not bad val­ue ei­ther. So for those in it for the long haul it rep­re­sents a good ad­di­tion to a port­fo­lio,” Ramkhelawan ar­gued.

With the de­cline in eq­ui­ty and bond mar­kets in the US Bourse Se­cu­ri­ties Chief In­vest­ment Of­fi­cer was asked what should be the ap­proach of the man­agers of the T&T Her­itage and Sta­bi­liza­tion fund?

Ramkhelawan said, “The fa­mous say­ing is, you buy fear and sell greed and cer­tain­ly, there’s a lot of fear per­vad­ing mar­kets right now. There is that very bear­ish sen­ti­ment, it seems as thought there is no light at the end of the tun­nel but that is prob­a­bly one of the bet­ter times to buy and we al­so need to be cog­nisant that these pe­ri­ods typ­i­cal­ly are sharp and short, and they are very of­ten fol­lowed by longer pe­ri­ods of pos­i­tive and up­ward move­ments in as­set prices. So while in­vestors may be feel­ing a bit gloomy, they should not close their eyes to op­por­tu­ni­ties in­ter­na­tion­al­ly and cer­tain­ly look for bar­gains that are very at­trac­tive. Com­pa­nies who have bonds and stocks out there that you should be adding to your port­fo­lio at this time.”

He added, “I mean the in­vest­ment man­agers cer­tain­ly should be on their toes and may have shift­ed some of our HSF al­lo­ca­tions in­to cash giv­en what was go­ing on, but they would not have shift­ed all of it so yes we should ex­pect some down­side. I think the HSF is about even­ly split or maybe 60-40 be­tween bonds and eq­ui­ties. Both as­set class­es have come un­der pres­sure, but the HSF typ­i­cal­ly in­vest in high qual­i­ty as­sets so it’s re­al­ly more about price risk than ac­tu­al cred­it risk…. With re­spect to the eq­ui­ty port­fo­lio, I do be­lieve that they wouldn’t be dab­bling in very high­ly spec­u­la­tive po­si­tions in com­pa­nies as well. So buy­ing qual­i­ty and hold­ing qual­i­ty re­gard­less of this par­tic­u­lar down cy­cle in fi­nan­cial mar­kets may just present an op­por­tu­ni­ty if there is cash avail­able to add to the port­fo­lio and hope­ful­ly if there was or there is go­ing to be in fact, an in­jec­tion in­to the HSF af­ter a very long time it could present an op­por­tu­ni­ty, a buy­ing op­por­tu­ni­ty, a good buy­ing op­por­tu­ni­ty for the econ­o­my.”