Privatisation Plans Unlikely To Revive BISX Say Experts

by Carla Johnson, Investors Offshore.com

05 June 2003

The Bahamian government's plans to revive the beleaguered Bahamas International Securities Exchange (BISX) have been criticised as 'fundamentally flawed' by financial analysts, who, according to a Nassau Guardian report, argue that more radical action is needed to turn around the loss making institution.

Bahamian Prime Minister, Perry Christie, is hoping that the development of a local capital market through the privatisation of the Bahamas Telecommunications Company and other state assets, and their subsequent listing on the BISX will help to improve trading volumes which have consistently declined over the last couple of years.

"The privatization of Government corporations and the subsequent listing and trading of any shares widely held by the public can only serve to accelerate the pace of capital markets development in The Bahamas," the Prime Minister suggested in his recent budget speech, continuing: "In particular, any increased volume of trading of local securities is likely to lead to more efficient valuations of such securities, thereby encouraging more Bahamians to invest in such instruments. These are issues which the Government and the regulatory authorities have under continuing consideration."

However, observers maintain that reform is needed at a much more fundamental level if investors are to be attracted back to the BISX in the future. For instance, many lay the blame for the exchange's decline squarely at the door of its board. Observers have suggested that a general lack of vision and an appropriate business plan have forced the government to step in with its cash lifelines on numerous occasions. "The board knew that it was burning cash at a significant rate, hence a plan should have been implemented long before now and not waiting on the mercy of the Government," experts recently told the Nassau Guardian.

Analysts also believe that the government needs to list its bonds on the exchange, in addition to relaxing exchange controls so that foreign instruments can be listed. It is also thought that establishing closer links with other prominent globally recognised institutions such as the New York Stock Exchange or the London Stock Exchange would help to improve BISX's international profile.

According to the Nassau Guardian, trading volume on the BISX declined 23% in 2002 to 3.02 million, whilst the total value of traded shares fell by 38% to $14.6 million in the same period.

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