Minister of Finance and the Public Service Dr Nigel Clarke has stated that the Jamaica Stock Exchange (JSE) and companies that are interested in being listed to adequately inform the public through their prospectuses of the risks of investing in the local equity market.

Speaking at the JSE’s 16th Regional Investments and Capital Markets Conference on Wednesday (January 27), the finance minister expressed concerns about the seemingly light-hearted way in which the capital market has been advertising prospectuses of initial public offerings (IPO) and additional public offerings (APOs) to the public.

“When you go to buy a share in a company, it ought not to be a light decision. In developed markets, you cannot market a prospectus in the way that prospectuses are being marketed here in Jamaica, as if it’s an impulse purchase… the picture of somebody on the cover and it’s like you’re marketing candy or chocolate — that’s headed in the wrong direction and [JSE] should do something about it,” he said.

“In mature markets you cannot have a prospectus being a banner on an online newspaper, which is consumed by everybody whether they have a financial advisor or not. We can have unsuspecting persons seeing a nice shiny thing being marketed like it’s chocolate, and jumping in and have no idea about what they’re doing. When you’re buying a stock, you should be able to perform the kind of analysis that is similar to if you’re going to buy the entire company,” he stressed.

The minister further implored that the local equity market emulate more mature markets in the US, Canada and the UK to institute rules that ensure that prospectuses are advertised in a manner that fundamentally apprise potential investors of the risks associated with their investments.

“If we’re going to be a market that can be internationally accepted and can be a place that is like more mature markets then we’re going to have to follow the same kind of principles, if not, the same kind of rules,” Clarke argued.

He, however, warned that there will be government intervention if needed.

“Please take my criticism about how the marketing of these transactions happen constructively. As the minister of finance, I am very proud of the fact that Jamaica has such a vibrant market, it is the envy of the Caribbean. My only interest is that it is sustained over the long term. I don’t want it for just today, I want it for the next 25 years and to do so, I’m just encouraging you to get ahead of the curve. I ask that you act before the Government finds it necessary to,” he said.

Executive vice-president and chief investment officer of Sagicor Group Jamaica Limited, Sean Newman, who also spoke at the conference, indicated that the company will be launching an Investopedia webpage.

According to Newman, this platform will provide information on investments, risks, and questions that investors should ensure are asked and answered before making an investment.

“We certainly heard a lot of horror stories in the marketplace around people being very concerned and alarmed that their investments have lost money and didn’t realise that this was not a sure thing. I think this is certainly something that the industry will take back positively and constructively to ensure that there is more communication around various investment types,” he said.