By Rawle Lucas
Reading about money and investments is not an appealing thing to many. But the changing of the guard in the Lucas Stock Index is a development in 2022 that deserves some consideration. At the first trading period in January 2022, Republic Bank Limited (RBL), with at G$146.7B in market capitalisation, had the highest value in the Lucas Stock Index (LSI). RBL held the leading capitalisation position from the inception of the LSI in April 2010. This meant that its market cap was higher than all the banks as well. The first threat to RBL’s preeminent position in the index came from Banks DIH. Strong performance by the stocks of Banks DIH helped it to overtake RBL in the second week of January 2022 as the company with the highest capitalization in the index. This milestone by Banks DIH was the first time that a company dominated by local ownership had become the largest company in the LSI. It was a feat accomplished after 19 years of stock market activity. Things were only beginning to heat up in the market with Bank’s ascendancy. It would not take too long for two other locally owned companies to surpass RBL in the market rankings. Not to be outdone by DIH, Demerara Distillers Limited (DDL) soon showed signs of energy and by the second week of February 2022, DDL had surpassed RBL in market cap and ranking in the LSI. DDL now stood in second place behind DIH while RBL had slipped to the third spot. The manufacturing companies in the index had surpassed the banks as major influencers of the index. By the end of the first quarter of 2022, things took on a different look for RBL. The threat to its new ranking in the LSI was coming from a competitor in the banking industry in which it operated. In an eye-opening series of climbs, the market value of Demerara Bank Limited (DBL) had moved over 55 percent in three months and had virtually caught up with RBL by the end of March 2022. The stock price of RBL had barely moved upwards, about two percent, since the threat from the other stocks loomed over its head. The virtual tie between DBL and RBL lasted until the second trading period in May when the stock price of DBL held steady and that of RBL declined 1.538 percent and took its market cap below DBL’s. However, it was not until the second trading period in June 2022 that DBL asserted itself and took a firm grasp of the helm among the banks in the LSI. The market cap of DBL climbed by 3.659 percent enabling it to leap past RBL by nearly three percent (2.98%). Ever since then, DBL has not looked back. It grew its market cap by a whopping 32.353 percent to end the June trading period at G$202B, 32 percent higher than RBL. In the second trading period in July, the market cap of DBL climbed again this time by 35.556 percent to G$274.5B to take what now appeared to be an unassailable lead among the financial institutions in the LSI. During this period, the market cap of RBL was unsteady. The upward adjustments of DBL not only made it the bank with the highest capitalisation in the LSI. It also made it competitive with Banks DIH which was the second ranked stock in the LSI. It is interesting to observe that after 241 days in 2022, DBL stock points to an annualised return of 150 percent, assuming all things were equal. Guyana Bank for Trade and Industry (BTI) has an annualised return of 113 percent at this juncture while that of RBL sits at three percent. In addition, the profitability indicators from operations favour DBL. The return on assets (ROA) of DBL in 2021 was 2.82 percent while that of RBL was 1.62 percent. The ROA of the other two banks was also below that of DBL. Similar performance differences could be seen in the return on equity (ROE) between the banks. DBL reported a ROE of 16.39 percent in 2021 while RBL’s was comparatively lower at 13.8 percent. Again, the other two banks turned in lower performance numbers. The Bank of Guyana reports that the other three banks in the LSI continue to lag behind DBL in both ROA and ROE for 2022. DBL shows a ROA of 1.01 percent while RBL shows a 0.45 percent return at the end of June. The latter’s return is well below the industry average of 0.57 percent as are those of BTI and CBI which stand at 0.4 and 0.46 percent respectively. However, one must wonder if DBL would be able to maintain this top position among the banks. Ever since DBL’s stock price peaked at G$610, it has been in decline. For seven consecutive weeks, the price of DBL’s stock has fallen and reflects a 31 percent decline its market capitalization. Nothing seems to be able to justify the price of G$610 and the current slide in the stock price is indeed noteworthy. Could it therefore be that we are watching the race between the hare and the turtle? It is where the hare burns out and takes a rest and the turtle passes her to reach the finish line before her? DBL has the highest value in the stock market and may very well be able to maintain its top ranking among the banks. But, it must be kept in mind that RBL still has the largest deposit base. It still has the largest asset base. It generates the largest annual income which is either two or three times greater than the other banks in the LSI. But the biggest is not always the best. In 2021, the smaller BTI bank generated G$47 per share while RBL reported just about G$12 per share. DBL itself only could show G$6.56, the lowest EPS of the four banks in the LSI.
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By Rawle Lucas
Reading about money and investments is not an appealing thing to many. But the changing of the guard in the Lucas Stock Index is a development in 2022 that deserves some consideration. At the first trading period in January 2022, Republic Bank Limited (RBL), with at G$146.7B in market capitalisation, had the highest value in the Lucas Stock Index (LSI). RBL held the leading capitalisation position from the inception of the LSI in April 2010. This meant that its market cap was higher than all the banks as well. The first threat to RBL’s preeminent position in the index came from Banks DIH. Strong performance by the stocks of Banks DIH helped it to overtake RBL in the second week of January 2022 as the company with the highest capitalization in the index. This milestone by Banks DIH was the first time that a company dominated by local ownership had become the largest company in the LSI. It was a feat accomplished after 19 years of stock market activity. Things were only beginning to heat up in the market with Bank’s ascendancy. It would not take too long for two other locally owned companies to surpass RBL in the market rankings. Not to be outdone by DIH, Demerara Distillers Limited (DDL) soon showed signs of energy and by the second week of February 2022, DDL had surpassed RBL in market cap and ranking in the LSI. DDL now stood in second place behind DIH while RBL had slipped to the third spot. The manufacturing companies in the index had surpassed the banks as major influencers of the index. By the end of the first quarter of 2022, things took on a different look for RBL. The threat to its new ranking in the LSI was coming from a competitor in the banking industry in which it operated. In an eye-opening series of climbs, the market value of Demerara Bank Limited (DBL) had moved over 55 percent in three months and had virtually caught up with RBL by the end of March 2022. The stock price of RBL had barely moved upwards, about two percent, since the threat from the other stocks loomed over its head. The virtual tie between DBL and RBL lasted until the second trading period in May when the stock price of DBL held steady and that of RBL declined 1.538 percent and took its market cap below DBL’s. However, it was not until the second trading period in June 2022 that DBL asserted itself and took a firm grasp of the helm among the banks in the LSI. The market cap of DBL climbed by 3.659 percent enabling it to leap past RBL by nearly three percent (2.98%). Ever since then, DBL has not looked back. It grew its market cap by a whopping 32.353 percent to end the June trading period at G$202B, 32 percent higher than RBL. In the second trading period in July, the market cap of DBL climbed again this time by 35.556 percent to G$274.5B to take what now appeared to be an unassailable lead among the financial institutions in the LSI. During this period, the market cap of RBL was unsteady. The upward adjustments of DBL not only made it the bank with the highest capitalisation in the LSI. It also made it competitive with Banks DIH which was the second ranked stock in the LSI. It is interesting to observe that after 241 days in 2022, DBL stock points to an annualised return of 150 percent, assuming all things were equal. Guyana Bank for Trade and Industry (BTI) has an annualised return of 113 percent at this juncture while that of RBL sits at three percent. In addition, the profitability indicators from operations favour DBL. The return on assets (ROA) of DBL in 2021 was 2.82 percent while that of RBL was 1.62 percent. The ROA of the other two banks was also below that of DBL. Similar performance differences could be seen in the return on equity (ROE) between the banks. DBL reported a ROE of 16.39 percent in 2021 while RBL’s was comparatively lower at 13.8 percent. Again, the other two banks turned in lower performance numbers. The Bank of Guyana reports that the other three banks in the LSI continue to lag behind DBL in both ROA and ROE for 2022. DBL shows a ROA of 1.01 percent while RBL shows a 0.45 percent return at the end of June. The latter’s return is well below the industry average of 0.57 percent as are those of BTI and CBI which stand at 0.4 and 0.46 percent respectively. However, one must wonder if DBL would be able to maintain this top position among the banks. Ever since DBL’s stock price peaked at G$610, it has been in decline. For seven consecutive weeks, the price of DBL’s stock has fallen and reflects a 31 percent decline its market capitalization. Nothing seems to be able to justify the price of G$610 and the current slide in the stock price is indeed noteworthy. Could it therefore be that we are watching the race between the hare and the turtle? It is where the hare burns out and takes a rest and the turtle passes her to reach the finish line before her? DBL has the highest value in the stock market and may very well be able to maintain its top ranking among the banks. But, it must be kept in mind that RBL still has the largest deposit base. It still has the largest asset base. It generates the largest annual income which is either two or three times greater than the other banks in the LSI. But the biggest is not always the best. In 2021, the smaller BTI bank generated G$47 per share while RBL reported just about G$12 per share. DBL itself only could show G$6.56, the lowest EPS of the four banks in the LSI.
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