Published: Wednesday October 8, 2008
The chief executive officer of the T&T Stock Exchange, Wain Iton, yesterday agreed that changes need to be made to protect the local stock market from dramatic price changes based on sales of small quantities of stock.
Iton was responding to concerns after Monday’s stock market performance in which the Composite Index and the All T&T Index experienced their biggest declines since the indices were created.
The Composite Index plunged 35.96 points to close at 1,018.30, a decline of 3.41 per cent and the All T&T Index lost 62.54 points (4.39 per cent) to finish at 1,361.61.
Shares of Republic Bank Limited dropped $9.20 to $90.00 on trades of 365 stock units and Scotiabank T&T stock saw their price fall by $2.75 to $36.00.
The sell-offs prompted two senior bank managers to call for enhanced mechanisms to prevent large price movements on “a small volume.”
“What it says is that we need to look in terms of how we can preserve the market and stocks,” Iton said.
“We may need to come up with a mechanism that allows for small trades such as these not impacting the last sale price of a stock.”
Iton added, “So there needs to be a mechanism so that somebody who needs to sell theses shares cannot take the market down, take shares by nine dollars.
“So we have to look at that even though it is the reality of the market to have changes but we have been looking at it for some time.”
“Yesterday (Tuesday) was a big drop for the Composite Index the All T&T Index. But it is symptomatic of the mood of the market, our own domestic market and the mood of markets in general,” Iton said.
Managing director at Scotiabank T&T Limited, Richard Young, said it was a matter of the stock market adjusting after a period of high prices for bank shares.
“If you go back to the share prices back in June, when the RBTT money started coming in, I believe that when cash came in from the sale of RBTT, people were looking to invest, people moved to other shares, other bank shares, and that caused prices to move just after June, now that things have settled, it has come back down,” Young said.
“I think that it is a matter of some uneducated shareholder, if you may pardon my term, sold off because of what is going on in the world.”
The general manager of the trust and asset management division at Republic Bank Ltd, Charles Mouttet, also supported a call for more intervention to help control the shocks from small volume trading.
Mouttet said, “I do not think that what we are seeing is a translation of what is happening oversees. I think that what we are seeing is a couple of things, if you look at the price of Republic Bank’s shares, it had appreciated significantly in recent months for a significant period. We are not seeing that level of trading any more and the markets seems to have slowed somewhat and this is what is being reflected in the change in prices.”
Source: Trinidad Guardian Newspapers
http://www.guardian.co.tt/business1.html
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