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Govt. may list state shares with guaranteed returns on private stock exchange – VP Jagdeo
To inject life into Guyana’s private stock exchange, Vice President Dr Bharrat Jagdeo says the government can explore the listing of shares from lucrative government-created projects that will guarantee investors a return.
Vice President Dr Bharrat Jagdeo
This, he said, is one way the government can create trading volume and encourage private businesses to overcome their reluctance to go public.
Speaking with reporters at the Arthur Chung Conference Centre (ACCC) on Thursday, Dr Jagdeo noted that the existing stock exchange is privately-owned, even though its regulatory body, the Guyana Securities Council, is appointed by the government.
But the main challenge is “A lot of the private companies in Guyana don’t want to use the exchange because going public means they have to publish their records, their audited statements… Some people don’t want that type of scrutiny,” the Vice President explained. He noted that companies must also pay a listing fee, which has also kept major local players off the exchange.
Because the government cannot force companies to list publicly, the Vice President suggested that the government can use strategic state assets to spur the creation of trading activity and opportunities. This involves “syphoning off” high-return opportunities from the oil and gas sector, for example, the Fertiliser Plant.
The government had previously announced that it would build a fertiliser plant following the completion of the Gas-to-Energy (GTE) project that is being developed in Wales, Region Three. The plan is to create a company for the Fertiliser Plant that can allow ordinary citizens (like teachers, nurses, and fishermen) to buy shares, perhaps limited to 100 shares per person.
According to the Vice President, the government will then guarantee a 10 per cent return on those shares, with the government underwriting the guarantee to provide a “sweetener” to investors. These will then be listed publicly on the stock exchange “so that people can then sell.”
Ultimately, the Vice President said, the success of the stock exchange relies on the private sector recognising its value as an alternative to bank loans. President Dr Mohamed Irfaan Ali had also announced that the government will move to create a Junior Stock Exchange as part of a broader government effort to deepen the country’s financial sector and diversify investment options.
And according to VP Jagdeo, “he (President Ali) was hoping that the private sector would also make full use of the opportunity.” He made it clear that, “We are prepared to address any regulatory matter that would enable this to happen. We are prepared to create the incentive for this to happen. But then it’s up to the private sector to make use of it.” A stock exchange is essentially a regulated market where shares of publicly listed companies are bought and sold, providing an avenue for businesses to raise money and for investors to make gains. (DPI)
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