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Bourse Securities: Navigating financial storms

FOR as long as anyone can remember, the global financial shocks that have affected the world, have also had an effect on TT’s economy. From the dot com bubble burst in the early 2000s, to the 2008 global financial crisis and recent economic challenges, investors in TT, just like those around the world, had to navigate several financial upswings and downturns; and that is not something that will ever change. For the past 30 years, Bourse Securities has taken up the task of helping investors navigate the ever-changing global economic tides through consultation and investor education. The company celebrates its 30th anniversary in June. "Bourse as a broker and dealer, as well as other securities intermediaries, provides a vital role in advising and execution in investing in the stock market," said CEO Sarodh Ramkhelawan in an interview with Business Day at its office on Gallus Street, Woodbrook. "That is where we make a big difference, because we hold investors' hands and take them from the point of wanting to invest, to having invested." He said Bourse and other stock brokers act as the link between securities, markets and investors. "We had the first stand-off in Ukraine. We have covid19, we have Russia-Ukraine part two. I know we have the Middle East tensions that are ongoing. There will always be that volatility, there will always be that uncertainty. "But I think at the end of the day, the role that we play as Bourse is to really help our clients navigate that and preserve their wealth over the long term, and, of course, adapt to the different trends, technological changes and service delivery." 30 years of independent financial service Founded in 1995 by Subhas Ramkhelawan, Sarodh’s father, Bourse has grown from a fledgling company to one of the largest independent stock brokers in TT. At the time, most securities brokers were in some way connected or affiliated with banks. "When he founded the company, I think his vision was really to create a domestic, fully-indigenous securities market-focused business, as opposed to some of the other types of securities businesses that were around. "So after 30 years, we are the largest independent group in the country, which is something that we are quite proud of and that we try to maintain." [caption id="attachment_1163003" align="alignnone" width="1024"] Bourse Security CEO Sarodh Ramkhelawan at his office on Gallus Street, Woodbrook. - Photo by Ayanna Kinsale[/caption] The company introduced a range of investment products for the money market including trading in financial securities, investment management and corporate finance. One of the company’s earliest financial products involved repurchase contracts – a short-term agreement where one party sells securities to another with the promise to repurchase them at a later date for a slightly higher price. Under Bourse, the agreement would usually mature in a year. By 2007, the company had expanded from stock trading to entering into mutual funds such as the India/Asia fund, named Savinvest – a US-dollar-denominated mutual fund that provided a platform for local investors to participate primarily in Indian and Asian markets. "We also had our capital group fund which focused on the domestic markets. We had launched two income funds, a US fund and a TT fund. "We had evolved to more than selling shares and bonds to full-service investments and investment solutions. We continue to be that up to today." Ramkhelawan said as Bourse evolved, so too did the local stock market and the people and businesses involved. He said at the centre of this evolution was education on the stock markets. "Investor education was really one of the things that we focused on and that has evolved a lot over the past 30 years. "Information is now a lot more accessible to the everyday person. We have a more informed investing public and that has really brought about changes in investor preferences and styles. "It has reduced the information asymmetry, which is good, because it helps make the conversation easier when speaking to people about investing." Ramkhelawan added that investor enthusiasm has also changed over the years, along with TT’s economic fortunes, going from an oil boom in the 80s to low energy production in recent times. He added that challenges to move between TT and foreign currency is one of the factors behind a declining interest in local markets from international investment – a slowing in investor confidence has resulted in the TT stock market seeing a steady decline over the past three years. "I think it is more a reflection of local investor confidence for the domestic economy and structural changes that take place to legislation and things that might prohibit or change investor appetite. "What is interesting is that a lot of companies on the local stock exchange have actually improved their performance. What I think has changed is some structural issues in terms of legislative developments which have made it less attractive for institutional investors (large entities that pool money from various sources and invests on behalf of others)." [caption id="attachment_1163004" align="alignnone" width="683"] TT Stock Exchange, Nicholas Tower, Port of Spain. - Photo by Jeff Mayers[/caption] He said capital adequacy regulations have made it more difficult to hold equities as part of an investment portfolio. "It kind of skews a portfolio that wants to be able to grow in size, to hold more government bonds and more corporate bonds, as opposed to equities." He said one of the things the equities industry may need to look at is having the right size and fit of regulations for the TT economy and capital markets. "Typically, we take what might be considered best in class at a global level and try to copy and paste it to our local market, when we don’t have the depth, breadth or the size of capital markets that the US or Europe would have. I think there may need to be some right-sizing and, to the credit of the regulators, I think they are beginning to realise that." However, he said the slowing in investments does not mean a reduction in overall investment enthusiasm. Ramkhelawan said there is still a very strong and growing interest in making their money work for them. "It might not be heavily allocated to the stock market. It may now be shifting more toward bonds, corporate funds, government bonds, etc, but the enthusiasm to invest is there. "I would say that over time, investors, because of that increased information have become, not less wary, but they are more comfortable having conversations with people about investing. I think that's a good thing for the country." Businesses, too, have evolved along with the TT stock market – the way it communicates with investors, especially since trading publicly on the local stock exchange has become a method of raising capital for many businesses. Ramkhelawan said lines of communications have grown, through quarterly financial reports, annual general meetings and statements on changes in each company through the TT Stock Exchange or the media, to give investors frequent updates on companies’ financial position and business plans. "That frequency of communication has become a bare minimum expectation by investors," he added. "It has become increasingly important for any company that wishes to retain the ability to raise capital from public markets to build that trust and maintain that trust. That relies a lot on communication. "If we are putting our money into these businesses, we need to know what they are doing with that money." He said the use of technology has also evolved to benefit investors with one of the most important aspects of making good investments – information. "Investing is an information game," he said. "I tell my team, you can make a bad decision with good information, but it is very unlikely to make a good decision with bad information. "So in that regard, I think the TT Stock Exchange (TTSE) has come a very long way in terms of being able to provide timely information and updates that come out of company developments. [caption id="attachment_1161575" align="alignnone" width="683"] TT Stock Exchange, Nicholas Tower, Port of Spain. - Photo by Jeff Mayers[/caption] "The companies, regulators and the TTSE are doing their part to create timely information coming to investors so they are able to make more informed decisions." Ramkhelawan noted that while people are still enthusiastic about investing in markets, the market remains volatile and susceptible to international shocks such as wars, changes in tariff regimes and geopolitical changes. "Well over 70 per cent of our consumed goods are imported and a lot of that is input costs. When we think about some of the things such as materials, packaging, even some semi-processed goods, all of those things are imported. We have to buy it, it has to come from somewhere, it has to pass through some port and therefore would be subject to things such as tariffs. "Even before the tariff changes, when Ukraine and Russia went to war, there was a significant inflationary impact, because there was total chaos with respect to supply chains, commodities etc. "We are heavily affected by what goes on externally." Five things to consider If you want to invest Ramkhelawan said there were five things to consider if people were interested in investing in equities or bonds. The first on that list is to figure out what your investment goal is. "You have to figure out your return objective. Do you want to make a three per cent interest on your investments? Do you want to make five or eight or ten? From there, you have to figure out your risk objectives. "Everyone would want to make ten per cent interest a year, or double their money in a year, but how do you achieve that?" That is where stock brokers usually come in. Brokers help customers determine if their return objectives are feasible given the environment and the options available. Ramkhelawan said the second thing people should consider is their risk appetite. "Are you willing to invest in the latest IP or invest in something that is really risky? And will you be able to sleep at night knowing that you could wake up to some terrible news and things go south?" He added that brokers also assist with finding the financial options available that will match with a potential investor’s return ambitions. "Brokers help answer questions like: What do I need in terms of liquidity? How quickly do I need access to this money? "Discussions with brokers along those lines will also help to form or shape what your overall investment portfolio looks like." Finally, Ramkhelawan said one should consider their end game and how long they plan to invest in equities. "Am I investing today for tomorrow? Am I investing for ten years or 20 years? "If you know that you want to have a $2 million or $3 million nest egg in 20 years that also helps in shaping your portfolio, because it tells you what is the minimum return you would need over that particular period." New investment opportunities Same investment strategy The future of investing is bright and always evolving with new technology and information, making it easier for local investors to access international markets along with local markets being exposed to international investors. Investment opportunities such as bitcoin, NFTs, meme stocks and others have also made the equities industry more exciting. Ramkhelawan, however, cautioned that as investment opportunities evolve the strategy behind making a solid investment stays the same. "When we think about things like bitcoin and NFTs and all of those things, these are usually fads. "For an investor who is thinking more long-term and less speculative, it is easier to stick with what we call 'blue chip' investments. "You don’t have to get too sexy or exciting when it comes to investing. You just have to continuously put your money to work in what I would call very reliable, recession-proof, bomb-proof investments. "Bitcoin got to a certain value, then it crashed. The NFT story was great, then it just fizzled out. Metaverse was supposed to be this amazing new frontier, then it just totally went flat. "But Republic, as a local example, is one of the largest financial conglomerates in the region. It has the largest market share in TT. It is expanding regionally. It is giving a really generous dividend. "It has solid management and a long track record. These are the stories that an investor is interested in." With regard to Bourse, Ramkhelawan said it will continue its mandate to help navigate the ups and downs of local and international markets, to make investing easy and beneficial. "We remain intensely passionate about improving our client experience, helping to add value for our clients and that's not going to change. I think that's pretty much within our DNA. "Whatever market cycles come and go, we are relied on by our clients to help them move through those cycles – whether they have to actually do anything with their portfolio, or whether it's just a hand to hold to say, okay we are in it, for the long run, just be patient. This too shall pass."   The post Bourse Securities: Navigating financial storms appeared first on Trinidad and Tobago Newsday.