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By Dr Rawle Lucas
A new report will be published by this writer each month on selected activities of the stock market that occurred during the previous month. This report could be seen as a tool to share consolidated information about the activities in the stock market in Guyana. Before dealing with the specifics of this week’s report, it would be useful to provide general information about the stock market and the data that will be utilised in the monthly reports.
The Guyana Stock Exchange has been operating formally for 18 years. It is operated by the Guyana Association of Securities Companies and Intermediaries, Inc. (GASCI). Unlike most other stock exchanges around the world, trading on the stock market in Guyana occurs weekly and settlement of transactions could take just as long or even longer. The lethargic market operation gives the impression that little interesting or useful information could be gotten about stock trading in Guyana. While it lacks the excitement or frenzy of daily or up-to-the minute trades as occurs in more sophisticated markets and that are reported out periodically during the day, GASCI provides weekly reports on stock trades in Guyana. This information, when accumulated for a given period, in this case monthly, enables us to get a view of the volume of trading activity and the associated cash value for each month. In other words, GASCI’s information allows us to construct what would be the equivalent of the monthly sales report of a business: which products were sold, quantity sold, and the money generated from the sales.
Compared to how the various markets for most other goods and services operate in Guyana, the stock market, with its named stocks, weekly prices and volumes reported by GASCI, can be seen as providing more transparency and immediate information about the products sold through that market. Though the public does not know who the specific sellers and buyers of the stocks are, it is easy to know the level of trading activity of stocks of the issuers contained in the Lucas Stock Index (LSI) that are transferred from one owner to the next through the stock market. This does not happen in markets for other goods and services where greater secrecy and non-disclosure is the norm. Further, we might not know the motive for the weekly stock trades but could assume that the high volume of activity of a stock is a signal of the interest that investors have in the stock since company performance and industry conditions do not seem to affect trading decisions in Guyana.
Market principles tell us that fluctuations in stock prices are the result of supply and demand which, in turn, enables us to tell when there were more buyers than sellers and vice versa in the market during the review period. The monetary value of the shares exchanged allows us to form an opinion about the equity holdings in the various companies that would have changed hands each month. The price helps us to understand the changes in the market capitalization of the companies. It also tells us how much liquidity was brought to the market and which stocks led the way in doing so.
Monthly Stock Activity Report, May 2021
The stocks of five of the nine companies that make up the LSI were active during the month of May. This was followed by the stocks of DDL and DTC which traded during four of the five trading periods. Trading less frequently during the month of May were the stocks of BTI and RBL. RBL traded for two periods while BTI traded during the first trading period only. The laggards for the month were stocks of CBI, CCI, DBL and SPL which saw no trades.
Average Quantity Traded
The number of stocks changing hands were also dominated by DIH which accounted for 98 percent of all trades. Of the active stocks shown in Figure 2, an average of 251,832 of DIH shares changed hands weekly, well ahead of RBL, the second highest with an average of 5,850 shares. Lesser weekly trading quantities were exhibited by DDL, BTI and DTC which had weekly averages of 2,706; 2,066 and 500 respectively.
A total of 1,285,750 shares was swapped for cash at a value of G$109,690,568. As one would expect, the bulk of the liquidity, 91 percent, was generated from the sale of DIH shares. RBL accounted for five percent of the liquidity generated by the stock market during the month of May. The remaining four percent was distributed among DTC, which accounted for two percent of the liquidity, DDL, which accounted for one percent and BTI, which also accounted for one percent of the transferred liquidity.