The year ended December 31, 2001 was a challenging one for the Barbados Stock Exchange. Share prices and volumes cascaded even though the September 11th disaster did not have any direct effect on this market, which is not yet sufficiently sophisticated to react to this type of pressure. However, areas of substantial growth were achieved in the Junior and Bond Markets respectively.
This period also included many changes to the legal framework. In particular, a new Securities Act, on August 2, 2001 brought several adjustments to Capital Market Regulation. Hopefully this strengthening of the infrastructure should encourage foreign Portfolio inflows to boost cross border activity and by extension liquidity in the market.
In 2002, the volume and value of shares traded in the Regular Market fell by approximately 14% and 11% respectively. Aggregate totals, fell by 70% and 79% respectively. This large decline resulted from a fall in the volume of put-throughs for 2001, from 25,087,559 in 2000 to 715,746.
Conversely, the Junior and Bond Markets registered dramatic growth. Volumes in the Junior Market increased from 675,354 to 4,640,177 and Bond Market volumes increased from 1.0 million to 10.1 million in 2001.
Index and Market Capitalization
By the end of 2001, the Index had fallen by 4%, compared to the year 2000. Eleven Stocks registered price declines during the year; nine registered increases; two remained firm and three new companies were listed. Banks Holdings Ltd. recorded the largest price decline, falling from $4.30 at December 31, 2000 to $3.00 in 2001. West Indies Rum Distillery showed the greatest, domestic price increase, rising from $1.70 at opening on January 1, to $2.20 at the December close.
Market Capitalization increased by 8.2% in 2001 based mainly on the addition of three companies to the Board of the BSE. The two local companies added during the year were the Barbados National Bank Ltd. and the Insurance Corporation of Barbados Ltd; one Regional listing, that of BWIA West Indies Airways was also listed.
Regular Market
In the regular market, the number of transactions fell from 631 in 2000 to 544 in 2001. However, there was no major change in the average value of transactions which changed from $22,121.50 to $22,835.05.
The top 5 volume leaders were, CIBC W.I. Holdings Ltd which showed an increase in price and volume, compared to 2000. Following was Barbados Shipping & Trading Co. Ltd. with a fall in price but an increase in volume. Life of Barbados Ltd. recorded declines in both price and volume while Goddard Enterprises Ltd recorded increases in volume and price. Only one Regional listing was among the top five, however, RBTT Financial Holdings Ltd's volumes declined while price increased during 2001.
Fixed Income Securities
The Bond Market saw increased activity this year. Volumes moved from approximately 1 million to over 10 million. This increase was based on trading of not only Government Paper, but also included Government secured, BNB Housing Bonds and Hotel and Resorts Limited Debentures.
Junior Market
The Junior Market showed exceptional growth this year with the Fortress Caribbean Property Fund and Property Fund Warrant trading 4,640,177 shares during the year under review.
Outlook 2002
Projections for the Year 2002 are promising. The size of trades to impact the Index and Market Capitalization has been increased from 100 to 1000 shares. This adjustment should reduce index volatility while strengthened Regulations and a fully operative Securities Commission should add confidence to the Market and increase activity thereby adding liquidity. In addition, it is expected that the Brokers will be trading remotely as early as February 1 and this should provide more time for the BSE staff to concentrate on marketing the benefits of the Exchange through educational programmes and workshops.
