Investors spook easily

May 22, 2023 Features / Columnists, The GHK Lall Column

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Hard truths…

Kaieteur News – The PPPC Government is leading the way in the appeal against Judge Sandil Kissoon’s ruling that brought Exxon back to reality, because “investors spook easily.” Calculated scaremongering, I say. Suddenly, Guyana’s Vice President, Dr. Bharat Jagdeo, is now an authority on investor sentiment, investor confidence, and investor psychology.

In his haste to defend anything and everything for Exxon’s highflying, Dr. Jagdeo leaves some inconvenient loose ends in the wake of his sturdy representations. Second, he is now concerned about a distant investor class. Both now assume the greatest prominence in Dr. Jagdeo’s head, when compared to that of the Guyanese people. Not even his own people are convinced, who now discern that he has abandoned Guyana, and is now completely committed to the interests of foreign investors.

What does the Vice President know about investors that spook easily? Despite the laughable claim of “we are savvy with these thing” VP Jagdeo is on barren ground when he labors for spooked investors. I help him. Politely, Dr. Jagdeo overestimates himself. For one, these are not the kind of investors who are betting lifesavings or mortgage money to make a quick score from the many lucrative opportunities abounding in oil rich Guyana. Rather, they are groups and entities with billions to invest in the next big thing, which they are always on the lookout for, which is Guyana.

For sure, the optimum situation would be stable political climate, settled regulatory regime, and a jurisprudential mindset that is “predictable” and not of the “murky waters” as attributed to Guyana’s leading oilman, Bharat Jagdeo. This is what comforts such investors the most, but judiciaries are not set in stone, and there is the credible probability that the same holding, or one close to it, could prevail at the CCJ. This leaves investors with some simple choices.

Though they become even more watchful about developments in Guyana, they do not get so spooked to the point that they bypass the golden investment opportunities that this country has to offer. In any matrix of comparative risks and returns, Guyana would not highly feature (risk-wise) as other places, given its current environment, judicial ruling and all.

For low-to-low medium risk, by any measurement, any set of criteria, the potential returns from an investment in Guyana aces most misgivings, any slate of anxieties, that may have surfaced. To date, Guyana has not devalued to the state where it is so fraught with risks that the probability of recovering an original investment amount is on the low side. The reality is far from any such thing, and from that first step of recovering what was sunk in Guyana, then there is only the upside that flows from being a cog in the sprawling support architecture of Exxon’s operations offshore Guyana. It is unbeatable.

Thus far, the emphasis has been almost exclusively on the numbers side, i.e., what is put in is what is first easily accounted for, or recovered results. Now, some other variables are massaged into the investment decision to invest or not to invest (or to stay or not stay the course, by holding as highly), in Guyana, and its range of rich potentials. There is no concern about investment objectives, which can be brushed aside, and lumped under the banner of preserve and make as many multiples of the capital invested as could be had from here.

Each investor, whether spooked or solid as rock, must be able to come to soberminded and rock-solid conclusions, as driven by their own simulations of different scenarios, relative to how much risk appetite they possess. In other words, how hungry are they for returns that could be borderline questionable. Now, added to that risk appetite, there has to be, as internally computed by each potential investor, a sense of how much risk tolerance they can manage.

Their own models are going to guide them. Of course, it would be prudent for investors to factor in some weighing into their models for judicial or regulatory decisions. Like they would have done for a change in government. After all, nothing is permanent. Remember, we are discussing investors that are ultra-sophisticated, and who are usually not into investing by the seat of the pants, meaning, gambling with the house money.

There is a final word that needs to said is that at the level of the US$100 million and above investment crowd that beats one another out of the way to beat a path to Guyana’s wide open investment frontier. In a nutshell, they are rational investors, who invest with their heads and not their hearts, or some irrational sentimentality.

Rational investment actors measure every scrap of information, development, study, and the results of their own local scouting missions before deciding to get on the Guyana boat, or stay the course, or pull the plug. If anything, they may be more prone to over-analyzing and over-evaluating scenarios. And for each one that spooks, ten more jump into the void.
Putting all the aforementioned on the table, I think that what Dr. Jagdeo is doing with “investors spook easily” is manufacturing his own reality, creating his own tensions.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• CCJ, Dr. Bharrat Jagdeo, Exxon, investors, Judge Sandil Kissoon’s ruling, PPP

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