The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas International Securities Exchange’s (BISX) chief executive believes a “damn good improvement” is occurring in the stock market, with the buyers-to-sellers ratio now standing at 50/50 after deteriorating to 20/80 at the recession’s peak.

Noting that “some weeks” the number of active ‘Buy’ orders now exceeds their ‘Sell’ counterparts, Keith Davies said the fact more players were entering the Bahamian capital markets indicated confidence was returning.

Suggesting that investors were becoming “very bullish” on some BISX-listed securities, Mr Davies told Tribune Business that notwithstanding the sluggish recovery in the overall economy, some stocks were poised “to see increasing gains” in 2013.

Further evidence indicating that Mr Davies’s optimism is not misplaced comes from BISX’s market report for the first nine months of 2012. For the January-September period, the average total value of daily trades hit $80,219, a 52.8 per cent increase upon the 2011 comparative’s $52,491.

In terms of average daily trading volume, for the first nine months in 2012 it hit 17,965, a 65.4 per cent increase over the 10,861 achieved during the 2011 comparative period.

The increase in both share trade volumes and values indicates there is more activity in the Bahamian capital markets, with sellers and buyers increasingly willing to interact with each other. The stock market, based on year-to-date data, appears to have bottomed out in February 2012 and begun a tepid recovery, with the long-standing oversupply of ‘Sell’ orders being eliminated.

“I know persons who have expressed more interest in the market, and we are seeing more buy orders in the market than sell orders, which is indicative of more people having more confidence in the market and being willing to embrace it,” Mr Davies told Tribune Business.

“Based on the raw numbers and amount of ‘Buy’ orders relative to ‘Sell’ orders, it seems the sentiment in the market has been moving in a positive direction.”

Asked by Tribune Business what the ratio of ‘buy-to-sell’ orders on BISX now was, Mr Davies replied: “Virtually 50/50. Some 70-odd are buying, and 70-odd selling.”

And he added of that ratio: “It was probably much higher than that for a couple of years - far more sellers than buyers for a while. I’d say it was higher than 60/40 in favour of sellers, probably closer to 70/30, even 80/20 in their favour, but we see the number of buyers creeping up.

“Some weeks we have more buyers than sellers, which is a positive. That’s an indication of the market; persons are very bullish on some securities. It’s a damn good improvement.

“We’ve got people entering the market, which is always a good sign, and we will continue to look at and track this particular data set to get more understanding of the trends, and how the market is moving.”

The rate of decline in BISX’s All-Share Index has also tapered off. For the nine months to end-September 2011 it fell by 8.23 per cent to 1,376.14, a drop of 123.37, but for the same period this year it only declined another 4.17 per cent or 56.98 to 1,308.01.

Total trading volume for the nine months to end September 2012 was 3,401,318 shares with a cumulative value of $15.16 million. This compared to a total trading volume of 2,058,857 shares for the same period in 2011, with a collective value of $9.836 million.

For the three months to end-September 2012, which encompasses the third quarter, trading volumes actually dipped compared to the year-before period, hitting 573,406 compared to 810,822. Yet the total valus of shares traded during the 2012 third quarter was ahead by 3.1 per cent, standing at $2.981 million compared to $2.89 million last year, indicating pricing power is beginning to return to the market.

Acknowledging that capital markets the world over were no fans of a sluggish global recovery, often viewing it as ‘no recovery at all’, Mr Davies said this was “the new normal” that BISX and all exchanges had to go through.

“There are external forces that could bring pressure to bear on the market,” he added, “but right now we’re moving in a positive direction. Any time the market can display elements of strength, as opposed to weakness over the years, is a positive for us.

“The more our listed companies do to provide investors with the information they need, they might begin to see increasing gains, despite the economy, related to these listing opportunities.”

As at end-September 2012, BISX’s 27 primary listings had a combined market capitalisation of $2.788 billion. However, the Bahamian stock market has failed to mirror the recoveries seen by its global counterpart indices in 2012. The All-Share Index is down 4.17 per cent, compared to the MSCI Emerging Market Index’s 9.41 per cent appreciation year-to-date, and similar 14.56 per cent and 3.05 per cent recoveries for the S&P 500 and FTSE 100, respectively.

For the first nine months of 2012, Commonwealth Bank led the way in terms of both share volume and value traded. The 1.141 million shares that changed hands accounted for 33.5 per cent of BISX’s total volume, ahead of Freeport Oil Holdings (FOCOL) Class B Preference shares, which took a 10.3 per cent share.

Behind those two were FOCOL’s ordinary shares in third, with 8.3 per cent of BISX’s total trading volume, then AML Foods and Fidelity Bank (Bahamas) at 8.2 per cent and 7.2 per cent, respectively.

When it came to value, Commonwealth Bank accounted for $7.239 million or 47.8 per cent of total traded value, with FOCOL in second again at $1.418 million or a 9.4 per cent share. In third place was Cable Bahamas, with share trades totalling $1.389 million or 9.2 per cent, and FINCO and CIBCFirstCaribbean International Bank (Bahamas) rounded off the top five with 5.9 per cent and 3.8 per cent shares, respectively.

Commonwealth Bank also held top spot for the 2012 third quarter, accounting for 179,754 shares or 31.3 per cent of volume traded, and $1.124 million or 37.7 per cent of total value.

AML Foods finished second in the volume stakes with an 11.2 per cent share, followed by Cable Bahamas at 8.1 per cent, Fidelity Bank (Bahamas) and FINCO, both with 7 per cent.

When it came to value, Cable Bahamas was in second place with $399,783 for a 13.4 per cent share. JS Johnson finished third with a 7.7 per cent share, and CIBC FirstCaribbean and FINCO both came in with 6.9 per cent each of the total value traded.