If there’s one thing TT Stock Exchange (TTSE) CEO Amoy Van Lowe wants people to know when it comes to investing, it’s that they have nothing to fear.
“We have a very risk averse culture and therefore (to change that) it’s education, information and awareness,” she told Business Day during a recent interview at her tenth floor office in Nicholas Tower on Independence Square, Port of Spain. Sound financial advice, then, is the only way to change people's uncertainty to confidence, she added.
“Culture is not an easy thing to change. It’s not an overnight change so investor education and awareness is key.”
Since joining the TTSE officially last May, she’s made investor education one of her key missions – once that’s covered, everything else can fall into place. Investor education is the key to building financial reality, Van Lowe said, as she listed the five main things in life people need to invest and save for: retirement, children’s education, maybe a wedding, a house and critical illness.
“You start with understanding those goals then you can understand what your risk profile is – are you risk averse, risk tolerant and then your time horizon – short-term or long-term. Just saying you want to invest in a stock without understanding the thing means you may be investing in the wrong security.”
Teaching people how to invest
Van Lowe started her career at the Unit Trust Corporation in the investments department. After about 15 years she moved to the marketing department because she saw a gap in the message – something she believed her experience could fill.
“I found investor education was needed even then and because I had the knowledge and experience on the investment side with stocks, securities and bonds, I thought I would transition there to help people grow and financially develop.”
That’s the passion she hopes to bring to the TTSE, reinvigorating the market in the hope of attracting not just new investors, but new listings.
According to the TTSE’s 2018 annual report (the latest published on its website) the stock market has a market capitalisation (value of shares listed) of over $126 billion. Over the last year and a half or so, the exchange has also managed to get two listings on the junior stock exchange (designed specifically for small and medium enterprises (SMEs) with listing values between $5 million and $50 million) – CinemaOne and Endeavour Holdings Ltd – six years after the facility was introduced.
“We are going to focus, as we have in 2019, to re-energising our junior stock exchange to get more small and medium enterprises listed. We also need to get some of the larger brands listed, so we are going to go on a drive to encourage larger brands to invest. You have different sized companies like Sacha, MovieTowne or Associated Brands that you know are very solid companies,” Van Lowe said.
Given the risk averse culture of TT investors, was this perhaps holding back these major corporations from listing and instead, keeping their entities private? For some that’s the reason, Van Lowe said, but she also noted that she’s spoken to a couple of medium to large companies that just simply never thought about listing or explored it as an opportunity. Aside from raising capital, Van Lowe pointed out that listing on the stock market could be a possible exit strategy for divesting a company beyond just a family affair.
“So, yes. Some of them are (keen on keeping the business private) but I don’t think all of them fall into the category that they don’t see it as an option but rather have not explored it as an option.”
Van Lowe did acknowledge that some of the recent SME listings were undersubscribed, again noting the culture of reticence.
“I think it’s the investor again being cautious. You’re dealing with a cautious investing public, maybe a security people aren’t sure about. It’s caution for the most part I think and for them understanding this particular company. All of this non-activity or apprehension is really about getting people in tune with what a security is, how to invest and assess if a security is right for their portfolio.”
Young people, for example, were interested in CinemaOne because they felt connected to the product. The National Investment Fund (NIF), launched in 2018 and traded on the TTSE’s bond market, was also oversubscribed by 82 per cent, hinting that there is some desire in the market to invest (although the implicit government guarantee of the bonds, should its constituents – which include some of the best performing stocks on the local market – not provide the projected returns, does help mitigate risk).
Breaking into the market
The TT stock market is not an actively trading stock market, Van Lowe admitted, and again it goes back to being risk averse.
“Why? Because when you have a security, let’s say, a top performing stock, people will buy and hold – both individuals and corporations – because it’s a healthy investment for their portfolio. Why am I going to release these securities back on to the market when I myself need it in my portfolio? So, there are not many securities being traded on the stock market. When you talk about a small amount of shares being traded that can have a big impact on price it’s simply because there’s a small amount now available and somebody wants them and is willing to buy them. That small amount is because there isn’t a great availability. So it’s not that the market doesn’t react timely, it’s just because of the availability and non-availability of shares and the buy and hold strategy that most investors adopt.”
It might seem, then, it’s hard to break into the trading game.
“I won't say it’s hard but it’s developing relationships with your stockbroker. You have to be part of the investing community. Connect with your broker and once there’s opportunity you can get it. It’s only hard if you’re not in the game. You can’t win the lottery if you didn’t buy a ticket.”
The TTSE is also hoping to make it a little more appealing to get in the game by launching its online trading platform. The goal is by the end of March. It’s also going to re-launch its website and issue electronic statements for account holders at the TT Central Depository, its sister company where securities purchases are registered (stock certificates are old school). It will also be rebranding its look for a more modern appeal.
The online platform is for all investors, but especially towards young people as a way of engaging them in the digital space. It’s more convenient than having to visit a stockbroker in person, although in the initial sign up it might be necessary to make a trip or two to sign some paperwork. Stockbrokers are part of the online network, as they are still the intermediaries who buy and sell stocks on the investor’s advice. What the platform does is streamline how that information gets delivered. Van Lowe said online trading should make the market more efficient because once an order is put through, it’s queued up immediately to be addressed once it’s in that queue.
Another perception Van Lowe wants to shatter is that stocks and investing and trading in securities are just for rich people.
“Maybe 30 years ago. Not in the age of the internet, not in the digital age. Our culture is a conservative culture. I might sound like a broken record but we need the regulators: the TT Securities and Exchange Commission, TTSE, Central Bank and also the media to promote investor education and get people asking questions about why, how and when, so they can become more involved and educated so they can invest. It’s not about a rich people thing anymore.”
That’s all part of the culture and it permeates, so she made a decision to break that cycle with her children, teaching them early the value of saving and investing.
“My children are 16 and 18 now and they had an account opened for them as soon as they were born. And they’ve been taught how to save and buy what they wanted. I don’t want them to be afraid of investment. I have a line since they were little I ask them, ‘Children, how are you going to spend your money?’ And they reply, ‘Judiciously, mummy.’”
Getting the environment right
Van Lowe compared TT’s risk aversion to Jamaica’s risk tolerance, something she suggested was due to that country’s vibrant and robust ecosystem that encourages people to invest.
“The ministry of finance there is like a brother or sister – intricately working with them to support their growth and development. Their brokers are pushing as opposed to here there’s sometimes a push and pull here. Their investors are very risk tolerant, so therefore they are investing. People are creating companies so they want to list. In TT, it’s more reserved. It feels like the investor is sitting on the sideline. The TTSE is recognising this and our goal is we want to do something ourselves and partner with the TTSEC and Central Bank and Finance Ministry to push and drive and build the capital markets the way Jamaica is. I don’t like to use that comparison because I don’t feel like we should be comparing ourselves to Jamaica. I feel like we should be heading and leading as opposed to (following). They have an ecosystem that is rallying around them. I need an ecosystem like that.”
TT is cautious in its approach to doing things, she said, and the emphasis is wanting to be sure about what’s happening and that nothing is wrong. “Nothing is wrong with that because when you’re regulating a market you want to make sure everything is fine but also it you want capital development then there must be some kind of measured risk.”
There’s no need for a policy overhaul, she said, but more of a reassessment of the policy currently in existence to determine if it needs refining to be more enabling. But it’s mostly about raising awareness.
“We want to connect with people who might not know a lot, people who are savvy but want to know how it can be improved, the listed companies, and even internationally because what I want to do in 2020 is build stronger partnerships and greater collaborations.”
It’s really a multi-pronged way of getting to people, she says, via the regulators and the media.
“Everybody has a way of communicating information and everybody has a target market.”