Linda Hutchinson-Jafar, Business Writer
Trinidad and Tobago's largest brokerage house is anticipating that some of the pending merger and acquisition (M&A) deals will result in loss of market capitalisation on the local exchange.
But West Indies Stockbrokers Limited (WISE), which is owned by the RBTT Financial Group, says there is also opportunity for increased trading activity as portfolios will require rebalancing.
"This increased trading activity is expected from both the individual and institutional levels and, as such, with the 'big guys' back on the floor we may see some positive investor sentiment in the market," WISE said in its outlook for 2008.
The M&A deals pending are: Royal Bank of Canada's US$2.2 billion takeover offer for RBTT's banking operations; Neal & Massy Holdings' B$8.50 per share bid for Barbados Shipping & Trading Company Limited; the rivalry for Barbados Farms Limited (BFL); and, Angostura Holdings Limited's US$10.65 per share or US$900 million acquisition of Lascelles deMercado and Company Limited.
The offers for BFL closed this week.
Early control
Sagicor Financial Corporation, through a number of 'lock-up' agreements with major shareholders, took early control of 7.83 million BFL shares.
But CLSS Holdings, a Clico subsidiary and rival bidder for BFL, is challenging those agreements.
Sagicor's offer for BFL is a cash and shares bid - B$5 per share for 35 per cent of BFL shares and the other 65 per cent exchanged for Sagicor stock, which the company values at B$5 per share.
Its bid offer, which is conditional on a take-up of at least 51 per cent or controlling interest in BFL, closed Wednesday, January 9, one day ahead of CLSS' all-cash offer of B$5.55 that values its bid at B$114.3 million.
Angostura's offer for Lascelles comprises an immediate US$4.50 per ordinary share payout, in addition to a deferred payment of US$6.15 per ordinary share by February 2011, with a built in discount for early settlement.
If the two companies are merged, it will form the largest Caribbean rum producer and fourth largest in the world.
In its reflection for the past year, WISE said the T&T stock market saw quite a bit of volatility, with a downward trend for the first half of the year, followed by a slow recovery which started in July.
Composite Index
In the end, the Composite Index closed the year at 982 points, up 12.87 points or 1.33 per cent on its open for the year, while the All T&T Index was down a marginal 0.42 per cent or 5.04 points to end the period at 1,200.69.
The top three volume leaders, or most actively traded stocks, each belonged to one of the three major Caribbean markets.
Leading the pack was Jamaica's National Commercial Bank Limited (NCBJ) with 19.8 million shares crossing the floor, representing 16.6 per cent of the market.
Trinidad's National Flour Mills Limited came in as the second volume leader, commanding 10.7 per cent of the market with a total volume of 12.7 million shares crossing the floor, followed by Barbados' Sagicor, which saw 10.2 million shares traded or 8.57 per cent of all trades.
Top picks for 2008
WISE identified its top picks for 2008 as Jamaica's GraceKennedy Limited and NCBJ, Trinidad's Republic Bank Limited and Trinidad Cement Limited, and Barbados' Sagicor.
In its review of the Jamaican market, WISE said the year ended in "mixed territory", with the broad JSE Index of the Jamaica Stock Exchange advancing 7,290.10 points or 6.75 per cent to close at 107,968.
In its outlook, WISE said investors should be mindful that the Jamaican economy is closely tied to the United States economy and, as such, the superpower's anticipated slow down would have a negative impact.
"Thus, the Jamaican Government will have to put measures in place to compensate for such a situation," the brokerage house said.
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