Equities markets face headwinds


The directors of Barbados’ largest mutual funds have identified two Trinidad and Tobago-based companies as the most reliable Caribbean securities in which it has invested.

In the Directors’ Review of the 2021 financial year of Fortress Fund Managers, it was noted that the Port-of-Spain headquartered conglomerates of Massy Holdings and Guardian Holdings as the top performing Caribbean equities. The Guardian Group was acquired by the NCB of Jamaica in the takeover bid.

“The Fund’s largest holdings in Trinidad, Massy Holdings and Guardian Holdings, produced solid gains of 40 per cent and 73 per cent respectively, as they reported relatively good operating results and announced plans to list on the Jamaica Stock Exchange.

“These were far better returns than most shares in the Caribbean experienced. Meanwhile in Jamaica and Barbados, the Fund’s holdings in shares like PanJam Investment, Sagicor Group Jamaica, NCB Financial Group, GraceKennedy and Goddard Enterprises saw mixed results with some posting gains and others declines,” said Investment Director Roger Cave in the annual report.

The mutual fund managers lamented that during 2021 heavily-tourism dependent countries like Jamaica, Barbados, The Bahamas and the Organisation of Eastern Caribbean States (OECS) continue to suffer severe impacts due to the COVID-19 pandemic with the Barbados stock market index dropping 11 per cent, while the Jamaica and Trinidad indexes were up four per cent and nine per cent respectively.

“The bright spark in the region over this year was Guyana where the recent offshore oil discoveries prompted expectations for the economy to be one of the fastest growing in the world in the next few years.

The share prices of some of the leading companies in Guyana reflected this optimism and the Fund’s long-time holdings in Banks DIH, Demerara Bank and Demerara Distillers posted gains ranging from 33 per cent to 144 per cent for the year,” Fortress informed investors.

As they looked ahead, Cave said directors of Fortress were cautious about the markets which were facing headwinds and could lead to lower returns for them.

“Slower economic growth, the possibility of tighter monetary policy, and high valuations in many parts of the market, may bring stock market returns back to more normal levels in the coming years. Thankfully, there is still excellent value to be found around the world in the kinds of high-quality, well-valued shares where we invest.”

Moreover, he suggested that the globally diverse nature of Fortress’ portfolio of investment will put them “in good stead”.

At the same time, the director stated: “It is important to note that even among these holdings, the outsized gains bouncing back from last year’s pandemic lows are unlikely to be repeated and returns will almost certainly be more muted in coming years.”

The Caribbean equities market was less inspiring to the Fortress directors who said the prospects are less promising.

“We do expect the pace of recovery will improve in the coming year as long-distance travel and tourism improve, but significant economic challenges remain for the region especially with the additional burdens created by the pandemic. This would not necessarily be a problem for equity investors if share prices in the region were cheap.

“Unfortunately, this is not the case. Shares in the Caribbean are on average fully valued, trading in many cases at significant premiums to where much larger company as with similar operations trade elsewhere in global markets.” (IMC1)