PETER CHRISTOPHER
Once again, the Trinidad and Tobago Stock Exchange (TTSE) endured a challenging year, but company’s CEO Eva Mitchell is hopeful that 2025 will bring better returns than 2024.
The Composite Index of the TTSE, which includes T&T companies and regional companies cross-listed on the local market, declined by 11 per cent in 2022, 8.8 per cent in 2023 and about 11.6 per cent. Over the three-year period, the Composite Index declined by about 28 per cet.
She explained that much of the struggles faced by the local stock market in the past three years have been related to several macroeconomic and market-specific factors.
Several of these are tied to the lingering effects of the COVID-19 pandemic; inflationary pressures and global economic uncertainty that has impacted investor sentiment.
She stressed that lower liquidity as a result of these challenges impacted the market due to decreased participation by institutional investors.
“In 2024 we saw less liquidity in the system. This would have been a result of the reduced amount of participation by institutional investors as their sentiment sort of shifted in 2024 causing lower trading volumes. That was a function of a number of different things. If you look at our bond yield environment or bond interest rates environment, that environment was actually attractive in 2024 because we saw some upward movement in bond yields, specifically on the shorter end of the curve. And bond yields and the stock market have an inverse relationship. So, if bond yields go up, stock market prices go down or tend to go down. So you would have seen that actually translate in our performance in 2023/2024,” she told the Sunday Business Guardian in an interview at her office in the Nicholas Tower in downtown Port-of-Spain last Wednesday.
She explained that while a decline in market capitalisation would represent a paper loss for investors and would affect portfolio values, it should be noted that realised losses occur only if investors sell at lower prices. She explained that long-term investors continue to benefit from dividends and potential price recoveries.
Despite 2024 being another year of decline, Mitchell is expectant there will be a turning point in the short to medium term.
“Let’s look at the opportunity in the markets. I think now, even though the market has been on a decline over the last two to three years, stock markets naturally get to a point where they bottom off, and then they shift. And I think now is a time when that shift will happen. So, I encourage investors, both institutional and retail investors, to take advantage of the opportunities now with any stock market,” said Mitchell, who also noted that despite the drop off in investments the performance of companies listed on the market was largely positive.
She said, “If you look at our companies that are listed on our stock market, they are companies that create or offer immense value to shareholders. These companies have consistently reported profits, and these companies have consistently rewarded their investors or their shareholders by way of dividends. So even though bond yields at this point in time are basically on par with dividend yields that are paid on the stock market, I think from a long-term perspective, the shareholder or the stock market investor will benefit, particularly as stock prices are low. I now see a shift is imminent in the system.”
SME focus
Mitchell noted that the TTSE has continued to do significant work to create a conducive environment for Small and Medium-sized Enterprises (SME) listings. In 2024, the TTSE signed Memorandums of Understanding with both the Trinidad and Tobago Chamber of Industry and Commerce and the T&T Manufacturers Association to create programmes geared towards SMEs to prepare those businesses to get listed on the TTSE. September 2024 saw Eric Solis Marketing become only the third SME listed on the TTSE and the first such listed since December 2019.
The initial public offering (IPO) for Solis was oversubscribed in August ahead of its listing.
“The Stock Exchange has done a significant amount of work to create that conducive environment for SME listing. So the Solis listing was just one of many that we expect to come on the exchange. We have been talking to a lot of potential SMEs. We have been working with our valued partners,” said Mitchell, referring to the partnerships with the TTMA and TTCIC.
She said the objective is to raise awareness of the benefits to SMEs of listing on the local stock market, including being able to access the funding that they need to grow their company and providing alternatives, rather than debt financing.
“We expect to see more of those listings this year, because some conversations are much warmer than others with our potential SME listings. So, expect to see some IPO activity this year, and it’s something that we expect to continue going forward.”
She said while there had been declines in the market for the past three years, retail investors continued to maintain an interest in the local stock market.
The TTSE CEO said heading into 2025, there would be a continued focus on education so that investor awareness and confidence in the market would increase.
“In 2024, we put a lot of focus and effort around investor education, and that’s something that we’re going to accelerate again in 2025. One of our objectives is to try to increase the investor participation of the working population, and to do that awareness is important. So we are going to continue to speak to businesses, speak to individuals, host our seminars, our webinars, informing the markets about what and how to build financial wealth using the stock market. So that’s something that we’re going to continue in 2025,” said Mitchell, who acknowledged that the WizdomCRM Virtual Stock Market Game did have a positive impact on investor behaviour in the country.
“I think everything that we’re doing in terms of investor education has contributed to the results that we are seeing in investor participation, in retail investor participation, because those channels directly target retail investors. As I said before, we have seen an uptick in the number of retail investor accounts that have been opened over the last two to three years since we started accelerating our investor education programs. As a matter of fact, over the last 10 years, we’ve seen a 60 per cent increase in the number of retail investor accounts within the depository. So we’re certainly heading in the right direction,” she said.
Proposed fee hike
Mitchell however was diplomatic in the face of a proposal by the TT Securities Exchange Commission to triple the fees paid by many market participants, including the TTSE.
She said, “The Stock Exchange recognizes the importance of having that regulatory oversight in the market. However, we do believe that any increases in stock market fees, or any regulatory fee increase that happens at this point must be done with a balanced approach that supports the wider development of the stock market and the growth of the stock market. But at this time, we will continue to engage with the SEC or the ultimate regulator to find that balanced approach, to ensure that whatever strategy or whatever approach is used is something that supports the integrity and growth of the market.”
Mitchell added the TTSE was still engaging stakeholders concerning the market-making proposal which she signalled i in 2022. She stated it remained a strategic initiative, as it can enhance liquidity and price discovery in the market.