PRESIDENT and chief executive officer (CEO) of Massy Holdings Gervase Warner is batting for the establishment of a regional stock exchange to smooth out inefficiencies in trading in the Caribbean, while the company has also pledged to make its presence felt more in the Jamaica market, especially for investors.

Warner and Massy Holdings Chief Financial Officer James McLetchie, speaking with the
Jamaica Observer on the sidelines of the recently held Jamaica Stock Exchange’s 19th Investments and Capital Markets Conference, said they want to see more Jamaicans investing in the stock but admit this would take convincing investors in Trinidad and Tobago, who own Massy Holdings shares, to sell them — a task they admit will not be easy given the losses the investors would realise when the sale is completed.

Massy Holdings cross-listed its shares on Jamaica Stock Exchange two years ago on January 27, 2022.

“The challenge is the extent to which we have shares listed on the Jamaica Stock Exchange. It’s one thing to cross-list and to create the opportunity [for people to trade], so when we cross-listed we did have a number of shareholders from Trinidad selling shares on the Jamaica Stock Exchange. That’s how we got shares to be traded on the Jamaica Stock Exchange…We started with a share price that was on par with what it was traded for in Trinidad. You saw that the share price in Jamaica traded down to a discount. This is not unique to Massy [as] other cross-listed entities like GraceKennedy and Guardian [Holdings] experienced the same thing,” Warner highlighted.

That discount is seen, for example, in the prices for Massy Holdings’ shares in Jamaica and Trinidad and Tobago. At the close of trading on Tuesday, Massy Holdings’ shares were valued at TT$4.45 on the Trinidad and Tobago Stock Exchange. At current exchange rates that would be valued at $102.00 but the stock actually closed lower in Jamaica at $90.00 on Tuesday. It means that if an investor in Trinidad and Tobago was to sell Massy Holdings’ shares in Jamaica, that person would be losing $12 or TT$0.52 for each share sold [J$22.92 = TT$1].

“We are not seeing the flow from the TTSE onto the JSE because of this price inconsistency,” Warner pointed out. When Massy Holdings cross-listed on January 27, 2022, its shares were valued at $2,463.08 — the equivalent at the time, based on exchange rate, of TT$106.00. It has since had a 20-to-1 stock split, but even with that the share prices are still down 26.92 per cent from its listing value in Jamaica, though it recovered somewhat in 2023 by finishing the year up 12.54 per cent from 2022. In Trinidad and Tobago the Massy Holdings price is down 16.04 per cent since it was cross-listed in Jamaica.

Warner said he finds that those who own Massy Holdings shares in Trinidad and Tobago are unwilling to sell them in Jamaica “unless they want hard currency”; that is, to convert the earnings to US dollars, which are short supply in Trinidad and Tobago.

Still, the Massy Holdings executives are adamant they want the stock to be more available in Jamaica, and will also drum up interest in Jamaicans investing in it. They said the plan is to meet more with brokerage houses in Jamaica, at least once per quarter, to have conversations to that end.

“I think we need to be here for you to understand who we are even more — and not just once a year — because I do think it is a solid, resilient stock,” McLetchie told the
Caribbean Business Report. He outlined a slew of growth targets for the company — including expanding its retail business in the US, and its motor and machines business, as well as its gas products business in Latin America — as “some of the ambitions we have going forward”. These, he said, should make the stock “part of every investor in Jamaica’s portfolio”.

Warner said their goal will take getting the pricing issues sorted out, and said a regional stock exchange would go a far way in helping.

“Hopefully, we can get that solved because some of us are working on a regional stock exchange that will eliminate that inefficiency, and therefore you would have more parity and price discovery because it would be one exchange,” Warner said.

The Massy Holding CEO said he is a member of the Caricom Private Sector Organisation that is working with the Caricom heads and the Caricom secretariat to achieve this aim.

“We have this unique moment in time where the Caricom heads have really come together to make a really concerted effort of doing some things to better realise the promise of this Caricom Single Market and Economy,” he said of the proposal for a regional stock exchange that was revived by Mia Mottley, the prime minister of Barbados, at the end of the Caricom meeting in The Bahamas last year January.

“We also have Barbados, Jamaica, Trinidad, as well as Guyana and the OECS (Organisation of Eastern Caribbean States) stock exchanges that are willing to be in this conversation. We are now starting a study to look at the requirements that we would need around common legislation and regulation across the different markets [so as] to understand the dynamics of stockbrokers interfacing and registering — and, more importantly, to be able to understand what the settlement challenge is, and what the solutions will be. Because if you have one regional stock exchange where people are settling in their separate countries, you have to work that out; and that I think has been, in the past, the issue that has stymied the realisation of a single regional stock exchange,” Warner said.

But he said with the political will there now to get a regional stock exchange up and running in all the territories, particularly the larger economies, it’s a matter of working out the details that are required, “and we are committed to go through with that”.

One such detail is how to settle transactions given that there is not a single currency in Caricom. For that, Warner looks to Africa for an answer.

“In Africa there is something called the PAPSS — the Pan-African Payment and Settlement System — and what they do, they allow settlements across all of the African countries by central banks talking to one another, so no one ever has to go into a foreign currency like the US dollar. If somebody in Ghana is trading with somebody in Nigeria or in Tanzania, they price their products in the local currency and, at the end of the day, the central banks settle.

“So you don’t find people scrambling to get US dollars to make a purchase in Nigeria, to then be converted to Nigerian currency. What you find is that people will do these transactions at rates that are published between the central banks. They never convert into US dollars. And at the end of the day, after all of the different settlements between the countries going back and forth, the central banks settle for the difference so it avoids this huge peak requirements of having people access your reserves — and all that happens is that the difference gets settled in the backdrop. We can do something similar in the Caricom.”