Uniform standards needed for regional markets: GHL boss

The streamlining of financial regulations across the region will improve cross border activity and boost volumes on financial markets in the Caribbean, says Guardian Holdings Group CEO Peter Ganteaume. Ganteaume was chairing a high-powered business panel, discussing Caribbean Finance and Funding, at the third annual Euromoney Caribbean Investment Forum in the Dominican Republic last week. Ganteaume said regional investors were finding it difficult to plan their long-term investment strategies because of the uncertainty of moving funds around the region. “Regulations are different in each territory, and the lack of confidence has encouraged the development of investors with short term horizons who mainly focus on sovereign bonds and treasury bills. He said this was particularly true in Jamaica where the long to medium term market is practically non-existent. He said the market is not as diversified as it should and governments in the region must move to provide an economic and legal environment to encourage more domestic savings and wider options for investors. He said recent moves by Jamaica’s Government to restrict movement and trade in foreign currency should be reversed as soon as possible and regional governments should make it public policy to reduce its activity on the local financial market to allow the corporate bond market to develop.

He said governments around the region must take steps to facilitate business and the flow of capital by updating legislation and widen the options available to pension fund managers, insurers and other institutional investors. Ganteaume’s position was supported by another panel member, Mauro Leos, VP — Sovereign Risk at Moody’s, the international financial rating agency.  Leos said the world is poised for the turnaround of the global economy, however the Caribbean is at a serious disadvantage as its risk portfolio is much too concentrated into a few industrial sectors. “From our view, as a rating agency looking at Caribbean economies, we see very vulnerable and volatile economies that are heavily invested in tourism and a few other sectors.   If these global markets are affected by the economic cycle or a shock such as the terrorist attack in 2001, or a downturn in the global travel industry, the whole region will be seriously distressed.

“That lack of diversity provides a serious risk for international investors considering the Caribbean. Incentives must be provided for financiers and the regional corporate sector to explore options in sectors other than tourism.” A regional strategy must also be outlined to get low cost funding available to the corporate sector, while providing the stability for investors. Investors can still manage their risk by strengthening their portfolio through diversification and being conservative in their investment options. The region must also make an effort to better integrate with Latin America. He suggested that this move might provide the opportunity to widen the financial markets. However, it is important to review the economic fundamentals of these countries before considering investment projects. “The potential of these markets is tremendous and we want to realise that potential, however nothing takes place without the right environment for savings and investments.” He said from Moody’s perspective, the more successful economies in the region are those that maintain well-regulated financial markets. “The authorities in these markets also have real power and independence to enforce the regulations. This provides the credible leadership and stability necessary for growth.”