The economy booms while the stock market whimpers

Oct 16, 2025 Features / Columnists, Peeping Tom

---

(Kaieteur News) – There is a paradox.  Over the past five years, the nation has embarked on a transformative journey, fueled by the discovery, extraction, and sale of oil. As anticipated, this has unleashed a vast economic expansion. Money is flowing, projects are launching, and the corporate sector, particularly the banking system, is reporting historic windfalls. Several banks have announced staggering increases in profitability, a direct testament to the booming economic activity.

Yet, a strange and contradictory story is being told on the Guyana Stock Exchange. For some large companies share prices are not rising in celebration. They are falling.  A number of listed companies are seeing substantial increases in profits accompanied by a substantial drop in their market value.

This disconnect defies conventional logic. If the economy is growing rapidly and confidently, if investment is pouring into the country, and if corporate profitability is soaring, what could possibly explain this? The evidence points to a single, inescapable conclusion. The mechanism that is supposed to reflect this health, the Guyana Stock Exchange, is not functioning as it should.

A stock market’s primary purpose is to be a rational and efficient discounting mechanism. It should weigh current performance against future prospects and set a price that balances the two. In a healthy market, soaring profits should, all else being equal, attract investors and drive share prices up. That this is not happening indicates a profound failure in the market’s core machinery.

So, what is broken? The problem is not a lack of economic success, but a critical failure to translate that success into investor confidence within the exchange. Several structural flaws in the market itself are likely to blame.

First, there is the critical issue of liquidity and participation. A stock exchange thrives on a constant flow of buyers and sellers. The Guyanese market, however, is notoriously illiquid. It is dominated by a small number of participants. If a handful of major shareholders, perhaps institutional investors, founding families, or early traders, decide to cash out their holdings to pursue other opportunities (like direct investment in the oil sector or real estate), their selling can overwhelm the entire market. With an insufficient pool of new buyers to absorb these shares, the only way to find a buyer is to lower the price. This creates a downward spiral, entirely disconnected from the company’s profit and loss statement. Those concerned about the dip in stock prices should examine whether there has been a dumping of shares that could have led to the decline in overall share prices.

Second, the market suffers from a failure to attract new capital. While investment is pouring into Guyana, it is conspicuously bypassing the stock exchange. International and local capital is flowing towards private ventures, infrastructure projects, and direct service provision to the oil and gas industry. These are seen as more direct, controllable, and potentially lucrative avenues. The stock exchange is simply not on their radar. This suggests a critical failure in marketing, accessibility, and the ability to list companies that are central to the new economy, leaving the exchange as a relic of the pre-oil era.

Finally, there is the pervasive shadow of transparency and governance. Investors must have absolute confidence that a company’s reported profits translate into real value for them. If there are concerns—warranted or not—about corporate governance, the protection of minority shareholder rights, or the transparency of operations, investors will apply a heavy “risk discount.” They will value a dollar of profit in Guyana as worth less than a dollar of profit in a more robust and transparent market. The market’s failure to build this trust is a fundamental operational flaw.

But to simply blame “market forces” or “investor sentiment” is to miss the point. The sentiment is the symptom; the broken mechanism is the disease. The Guyanese economy is performing its role, and the listed companies are doing their part. The stock exchange is not.

For Guyana’s prosperity to be fully realized and broadly shared, a functioning capital market is not a luxury; it is a necessity. It allows citizens to own a piece of the national success, provides companies with capital to grow, and creates a virtuous cycle of investment and innovation. Fixing it requires a concerted effort: encouraging new listings, boosting market-making activities, enforcing world-class governance standards, and actively marketing the exchange to a new generation of investors.

The falling share prices are a red flag. They are a clear signal that while the Guyanese economy has leaped into the 21st century, its primary stock market has failed to keep pace. The machine is broken, and it’s time for a repair.

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

---

• economy booms, Guyana Stock Exchange, Peeping Tom, stock market

---