SPSE Works On Raising Its Profile

Sanjay Sharma... optimistic.

Image. That is what Fiji's South Pacific Stock Exchange (SPSE) wants to have. An image that would get the public and companies to perceive the entity as an opportunity to increase monetary wealth and value.

This being the focal point of capital markets development in Fiji, those who are actually involved in it will tell you it is not an easy job. And the stock market, which is said to be the more riskier of other capital markets, is finding the task quite challenging.

As it is, there are only 15 companies listed on the exchange, hardly enough to provide options to potential investors.

Then, there is the tendency for those who are actually investing‹majority of them institutions‹to hold on to the stocks they buy, making the market a rather illiquid one, even starved of activity during some trading days.

It is indeed a challenge, admits SPSE chief executive Sanjay Sharma, to get companies to list and while the behaviour of institutional investors is technically a natural one (they tend to hold on to stocks), the biggest hurdle is getting the public to understand what investing in shares is all about.

That is why the image factor is very important. But what Sharma wants to avoid is a stock market bubble that would eventually burst with no one any wiser about the potential available in this concept. Things may be slow, he agrees, but the efforts put in so far by everyone including the regulator, Capital Markets Development Authority (CMDA), are beginning to make some headway.

"We have achieved a lot of things," says Sharma, whose three-year term as chief executive is about to expire.

"We wanted to have an image that would give confidence to the public and I think we have done that. There are a lot yet to be done and once we are in the minds and hearts of the corporations and individuals, we'll be able to achieve what we want. We are definitely moving in the right direction, but at a steady pace which is good."

It is perhaps only a matter of time before the so-called "investment culture" takes off in Fiji as belief in the growth of the different markets has been expressed in many ways by various parties. For a start, the University of the South Pacific has introduced a course called OEStock Market in Fiji' for finance and accounting students.

The exchange itself is financially supported in part by the government and foreign aid agencies such as the NZODA (New Zealand Overseas Development Assistance) and AusAid (Australian International Development Agency).

In the mainstream, a handful of companies are already enquiring about the listing process and according to Sharma, "we see at least two coming on board within the next eight months".

And more recently, the announcement by the Fiji Government in its 2004 budget of a 150 percent tax deduction on listing expenses now available to companies that wish to list on the stock market.

Even some listed ones are already testing the market's flexibility by raising capital through rights issues, employee option schemes and dividend re-investments.

While the actual day-to-day trading may not be as active as they would like it to be, what is evident is that growth is occurring simultaneously across the board.

There are awareness campaigns being conducted by both the CMDA and SPSE (100 programmes planned for provincial councils) which are designed for companies and the public.

Even broking firms too are running their own campaigns in their respective markets. Everyone is careful though that it is not overdone.

"The thing is, we don't want to create demand as yet. If you look at the board (of unexecuted orders), there are more people wanting to buy than sell. What we need is to have another 15 or more companies so when the awareness drive goes out there and people want to invest, there is supply," says Sharma.

He is not very worried about the pace of trade at the moment and chooses to look at it as an issue that needs to be seen in a bigger context.

"We are confident because we know there's a huge development going on behind the scenes. Give it three years and we'll tripple the size of the exchange in terms of shareholders, market capitalisation, listing, our operations and branding."

Of course, he adds, this is under the assumption that the economy and political stability remains the same or improve.