JMMB set to pull out of Barbados Stock Exchange

Observer writer

Friday, August 17, 2018

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The team at JMMB Group Ltd (JMMBGL) has announced via the Jamaica Stock Exchange (JSE) that “pursuant to a resolution of their board of directors dated September 28, 2017, JMMBGL proposes to voluntarily delist all of its issued and outstanding shares from the Barbados Stock Exchange (BSE). The JMMBGL shares will continue to be listed on the Trindad & Tobago Stock Exchange and the JSE.”

JMMBGL has stated that the reasons for the proposed delisting are as follows:

There are low levels of trading in the JMMBGL shares on the BSE, and

The low levels of trading in the JMMBGL shares do not justify the costs and complex regulatory requirements associated with maintaining the listing of the JMMBGL shares on the BSE.

Currently JMMB serves more than 283,000 clients in Jamaica, Trinidad and Tobago and the Dominican Republic combined.

In a research note dated July 25, 2018, the team at JMMB shared its views on the current economic challenges that the Barbados Government is currently facing.

“On July 24 Moody's investor service provided its latest credit opinion on Barbados. The rating agency noted that Barbados' inability to arrest its significant debt burden (estimated to be in excess of 174 per cent of GDP) effectively led to its default in June. The doubling of the debt over a decade meant that the shock to the economy was too much to bear. On the positive side, the new Government has moved quickly to consolidate its public finances, seek external multilateral dialogue (International Monetary Fund — IMF) and begin to renegotiate its debt burden. The problems, however, will not be easy to solve as a high-interest burden (26 per cent of government revenues), negative usable reserves and the complexities of an exchange rate peg leave very little room to manoeuvre.

“In assessing Barbados' ability to quickly recover from the current default, economic growth is a key barometer. Barbados' growth is dependent on tourism, which contributes approximately 40 per cent of GDP, as well as offshore financial services. The source market for Bajan tourists is Europe, and in particular the UK. However, Brexit, and prior to that Greece and general economic uncertainty in the Eurozone, has meant somewhat muted travel plans which has stagnated Bajan visitor arrivals.

“On the flip side, US visitor arrivals have provided somewhat of a buffer against the negative headwinds. The Government also met with a team from the IMF between July 2 and 12 and “through this consultative process, the Government expects to finalise a detailed package of revenue- and expenditure-side measures that will have broad-based social support and form the basis of a Staff-Level Agreement with the IMF, ahead of the Executive Board review.”

“The above statement suggests that the Government is slowly doing what needs to be done to arrive at a plausible restructuring plan to be announced to creditors.”

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