Guyana’s next major development To the Editor
Guyana Chronicle
May 31, 2002

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I read with interest Emile Mervin’s letter ‘Looking out for the new stock market’ (05/24/02) and couldn’t help the need to add my bit.

The writer has expressed the clear view that many in the private sector share, that is, easier access to financial capital will result in greater levels of corporate growth. As it currently stands, local banks have the final say (in most cases) in capital provisions for firms wishing to raise added funding, without having to issue more stock (debt versus equity financing), but given the bruising these financial institutions took in the past few years, it’s no wonder many new and established entrepreneurs are being turned down. This of course is no fault of the bank. Loan provision requirements have had to be tightened to ensure debt security, and these added provisions have left many without viable means of increased funding.

So you can see why a stock market would be a sound move for the country. Allowing the public to invest in our established companies would translate in true economic gains. It will not be overnight of course, but the changes will be evident. Somewhere along the line, the government might even allow cross border listings, thereby offering Guyanese the opportunity to invest in a wider variety of industries and companies based in other countries.

However, given the increased level of white-collar crime in markets that are already deemed efficient securities markets, such as the US, the Government of Guyana must not put the proverbial horse before the cart. Regulations and a whole lot of investigation, have to be carried out on those companies that wish to be registered as going public. Listing requirements have to be established, and a body created to monitor the activities of both brokers and traded companies, possibly a branch of the local accounting body.

Of course, that little profession that has become the stuff of legends since Enron & Global Crossing, that’s right, accounting, will need a massive local review. Gone are the days when accountants were seen as bland and stuck up (just look at John Cleese’s Accountant parody on the Monty Python series). In this day and age, we accountants can create controversy just as well as the junk bond peddlers of the 80’s.

So, is June a realistic launch date for a stock market? Certainly not. We should not expect a local trading floor for at least another year or so. Economic conditions, coupled with the ever-present political instability, would not serve as the prime climate for such a major direction change in our private sector. However, if the FTAA goes ahead as planned in 2005, a local stock market operating near efficiency will need to be in place way before that time.

However, the fact that the government and private sector members are actively pursuing this emblem of a true market based economy, should be applauded. I for one cannot wait for the day our local stock market trades it’s first share, that’ll be a truly proud day for all Guyanese.
Ron Allen.