Investor Confidence Grows In Bahamas Capital Markets

by Amanda Banks, Tax-News.com, London

18 July 2006

Investors were more upbeat in the domestic capital markets of the Bahamas during 2005, particularly in the third quarter of the year, according to the Central Bank.

Despite a 16.3% fall in trading volumes to 6.7 million shares, the value of shares traded on the Bahamas Investment Securities Exchange (BISX) rose by almost 50% to $36.3 million. Meanwhile, the BISX All Share Index appreciated by 30% to 1,350.7 points, continuing to build on the 19.7% gain reported in the previous year, the Central Bank of the Bahamas reported in its financial sector review of 2005.

The broader Fidelity Capital Market Limited Index (Findex), which captures over-the-counter trades, also advanced by 28.4% to 551.9 points, extending the previous year's gain of 14.9%.

With no initial public offerings last year, the number of publicly traded companies on the exchange remained unchanged last year at 19. However, total market capitalisation grew by 34.8% to $2.6 billion.

The most significant development affecting the capital markets last year was the government's acceptance of a set of proposals from the Central Bank to relax a broad range of exchange control measures affecting overseas investments by residents. These changes, which went into effect on January 1, 2006, were designed to stimulate increased activity on the BISX.

Subject to a 5% limit against the Central Bank's external reserves, up to $25 million annually has been earmarked for direct purchases of external securities publicly traded on foreign exchanges, which will be backed by issues of Bahamian Dollar Depository Receipts listed on the BISX.

The government also approved a framework to permit temporary residents with a right to work in the Bahamas and foreign owned business in the domestic market to invest in local securities.

In addition, consent was given for the facilitation of the eventual cross-listing on BISX of public securities traded on Caricom stock exchanges and visa-versa, within the annual net outflow limit of $20 million.

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