Gervase Warner on floating or fixed exchange rate: | Local business

MASSY Group president Gervase Warner says the issue of whether Caribbean countries should have a fixed or floating exchange rate is a bit of a red herring.

But he told a conference hosted by the Central Bank of Barbados last week that one of the reasons the group signed up to cross-list its shares on the Jamaica Stock Exchange is because of the T&T currency regime.

Warner was a panelist at Tuesday’s keynote discussion at the Central Bank of Barbados 41st Annual Review Seminar on Rebuilding Economies for the Future: Opportunities for Resilience through Diversification. The other panelists were Ian Durant, director of the Caribbean Development Bank’s economics division; and Michelle Doyle, advisor to the governor of the Central Bank of Barbados.

In response to a question as to whether resilient and competitive economies can be built in the Caribbean with fixed exchange rate regimes, I think we can build resilient economies. Fixed or floating currency; that’s a bit of a red herring. It depends a lot on the structure of each economy.

We should focus much more on the things that can make us more efficient and competitive. Unfortunately, some of those things are often unpopular.

Earlier in his answer to the question, Warner said: I don’t know that fixing an exchange rate or floating an exchange rate is really the determinant of the economic success and growth of our economies; whether it makes us more or less resilient.

It is the fundamental, underlying performance of our economies that really matters. If you are going to become an export earner and be blessed with a natural resource, be it sunny beaches and beautiful waters or petroleum or other minerals, you will have to work for it. You will have to find a way to make yourself efficient.

If you try to gain efficiency just by adjusting an exchange rate, you will always find yourself in a race to the bottom, as opposed to building strong institutions and strong companies.

I am much more in favor of greater competitiveness by developing economies of scale in operations.

He said this means looking beyond individual island markets and looking at the entire Caricom region as a domestic market.

Warner advocated making the entire Caricom region accessible to each of us individually as a home market.

He said the Caricom Single Market and Economy (CSME) is not living up to the promise and vision of 20 or 40 years ago.

Why Massy does cross-listing

When asked whether Massy Groups’ proposed listing on the Jamaica Stock Exchange would improve its competitiveness and resilience, Warner said: “We have found, driven in part by the currency regime in Trinidad and Tobago, that the Trinidad and Tobago Stock Exchange is not as attractive as in the past for international investors.

Warner added: You are well aware that international investors are unable to repatriate the proceeds of a sale of locally listed stock in Trinidad and Tobago. This is a major nuisance for any sophisticated financial institution that moves money back and forth.

Warner said the inability of international investors to repatriate the proceeds of the stock sale is a prime example of a collapse that is making Trinidad and Tobago less competitive.

In a message to shareholders on May 9, 2021, Massy announced that the board of directors has made a decision to apply for a cross-listing of the company’s shares on the Jamaica Stock Exchange. The group said: The board considered the sophistication of the market and the growth opportunities evident in the Jamaican securities market, which has become increasingly dynamic in recent years.

The president of Massy Group said the Jamaica Stock Exchange is attractive to international investors like the Trinidad and Tobago Stock Exchange once was.

He said the Massy Group sees the Jamaica Stock Exchange as a place where we see that we can invite more shareholders, more institutional investors and more traders to participate in Massy Holdings stock.

For us it represents another step in this integration of the Caribbean into the mindset of what we have created in Caricom.

The Massy Group president said all publicly traded entities operating in multiple jurisdictions in the region would prefer a single stock exchange where the shares of these companies can all be traded with economies of scale on a platform more robust than the multiple, small ones. fairs across the region.

If you were to ask any of us, would we want one financial services regulator for banks and insurance companies, (the answer would be) absolutely. It’s very tedious to deal with 14 different regulators, especially with all the new regulations on the way that are internationally driven and affect us as small entities.

Warner said: Small entities that have to manage relationships with multiple regulators are a cost, which makes us uncompetitive. And we don’t understand that there is a reason why we make ourselves uncompetitive.

That’s why the Canadian banks are pulling out of the Caribbean because it just isn’t worth working with different regulators on all these tiny little islands. It just doesn’t make much sense.

Massy in Jamaica

In its 2020 annual report, Massy Holdings Ltd stated that it received seven percent of its pre-tax profits and four percent of its revenues from its Jamaican operations. The group indicated that it operates two companies in Jamaica: Massy Gas Products (Jamaica) and Massy Distribution (Jamaica).

Massy Gas Products (Jamaica) is the leader in the distribution of liquefied petroleum gas (LPG) in Jamaica, which is used as a fuel for cooking, heating, power generation and manufacturing. MGPJ imports and markets its product under the brand name Gas Pro and, according to the annual report, supplies LPG to both the commercial (bulk) and domestic (packaged) market.

As part of a strategy to focus on three main portfolios of business-integrated retail, engines and machinery and gas products, Massy Holdings sold Massy Technologies to a Jamaican company last year for approximately US$50 million.

According to the annual report, the combined companies will have annual revenues of more than $250 million, operate in 19 countries and employ more than 2,100 IT professionals.

The 2020 annual report shows that Massy received approximately $50 million for the sale of the companies.

Shareholder groups

Massys’ largest shareholder is T&T’s National Insurance Board, according to the groups’ 2020 annual report. NIBTT owned 19,801,051 million of the 98,342,382 shares issued by Massy, ​​accounting for 20.13 percent of the company, on September 30, 2020.

Other major shareholders of Massy Holdings include:

RBC/RBTT Nominated Services Ltd

10,246,075;

RBC/RBTT Trust Ltd

9,410,305

Republic Financial Holdings Ltd

7.198,348

Barbados Central Securities

Custodian5.909.175

Of the company’s directors and senior officials, Massy Holdings chairman Robert Bermudez has the largest bloc. As of September 30, 2020, Bermudez owned 14,820 shares in its name and 1,901,393 shares in what is described in the annual report as holdings. This suggests that a Bermudez affiliate shareholder acquired 1,111,489 Massy Holdings shares between October 1, 2019 and September 30, 2020.

Massy’s stock price closed Friday at $80.50 per share, bringing its market cap to $7.91 billion. The day after Massy’s board of directors decided to cross-trade the company’s shares on the Jamaica Stock Exchange, on May 7, Massy was trading at $65 a share.