The Caribbean: An Emerging Market
When you think about the Caribbean, what's the first thing that comes to mind? If you said travel and tourism, you're not alone. Most people know the region for its beautiful sandy beaches, cocktails, vibrant music scene, and colorful souvenirs.
But you may be surprised to find out that this area is also home to an emerging capital market. There are 14 island nations in the region, including Aruba, Bahamas, Barbados, Belize, Cayman Islands, Curaçao, Dominican Republic, Guyana, Haiti, Jamaica, St. Maarten, Suriname, Trinidad and Tobago, and Turks and Caicos. This region also includes the Organisation of Eastern Caribbean States (OECS), which is comprised of the following islands:
- Antigua and Barbuda
- Saint Kitts and Nevis
- Saint Lucia
- Saint Vincent and the Grenadines
The Caribbean has great potential for economic growth. According to the World Bank, the region's per capita gross national income (GNI) ranges between $800 and over $30,000. It is also home to about a dozen stock exchanges. This article takes a look at the area's largest stock exchanges, where the majority of Caribbean stock trading activity takes place. Keep reading to learn more about how these exchanges function.
- The Caribbean has a vibrant travel and tourism industry, and is also considered an emerging capital market with about a dozen stock exchanges in the region.
- The Eastern Caribbean Securities Exchange is located in St. Kitts.
- The Barbados Stock Exchange is the third-largest stock exchange in the region.
- There are 45 companies listed on the Jamaica Stock Exchange.
- Founded in 1981, the Trinidad & Tobago Stock Exchange has as many companies listed as the Jamaica Stock Exchange.
Eastern Caribbean Securities Exchange
The Eastern Caribbean Securities Exchange (ECSE) is the Western Hemisphere’s regional securities market. It was founded in 2001 and is completely electronic. The exchange's mission is to provide the Eastern Caribbean Currency Union with the ability to issue and trade securities, and settlements in a secure and transparent manner.
Headquartered in the island of St. Kitts, a nation with a population of less than 53,000 people, the ECSE’s listed securities are a composite of government bonds from eight countries, corporate debt, financial institutions, and 13 utility companies partially owned by Eastern Caribbean governments.
The ECSE serves the islands of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia and St. Vincent, and the Grenadines. It provides the citizens of these small islands with the opportunity to own a stake in some of the region’s most eminent companies.
Barbados Stock Exchange
The Barbados Stock Exchange (BSE) was founded as the Securities Exchange of Barbados in 1987. It was reorganized and given its current name in 2001. It is the third-largest stock exchange in the Caribbean. Its market capitalization is about $2.44 billion, with 21 companies actively listed on the market.
Listed securities are a composite of government bonds, corporate debentures, and shares in businesses that mainly operate in the consumer goods and financial services industry. A handful of those firms are actually cross-listed on other regional and international exchanges, including:
- Sagicor Financial Corporation, which trades on the London Stock Exchange (LSE)
- Trinidad Cement Limited, which trades on the Trinidad and Tobago Stock Exchange
The exchange is open Monday to Friday and is closed on all major holidays. Trading activity takes place between 10:00 a.m. and 1:00 p.m. local time.
In 1871, the Bermuda Stock Exchange became the first Caribbean stock market to give investors the opportunity to buy and sell corporate shares.
Jamaica Stock Exchange
More than 45 companies that operate in the finance, communications, manufacturing, retail, real estate, and tourism industries are listed on the Jamaica Stock Exchange (JSE), making it one of the Caribbean's largest, most liquid, and sector-diverse stock exchanges.
The exchange was incorporated in 1968, a year before it began its official operations. It plays a critical role in the development and growth of the Jamaican private sector. Companies listed on the exchange range from finance and insurance, communications, retail, manufacturing, and tourism. There are seven indexes maintained by the exchange, including the:
- JSE (Main) Index: tracks the performance of all ordinary shares on the exchange
- JSE All Jamaican Composite Index: measures ordinary share performance for domestic companies listed on the main market
Shares trade on the JSE from Monday to Friday between 9:00 a.m. and 1:00 p.m. local time. The market capitalization of the JSE is just over $12.39 billion as of April 2021,
Trinidad and Tobago Stock Exchange
Although the Trinidad and Tobago Stock Exchange (TTSE) has roughly the same number of listed companies as the JSE, it is the largest exchange in the region by far. It was founded in 1981 under the Securities Industry Act 1981.
The market capitalization of the exchange is more than $17 billion. Unlike the other regional exchanges that have seen significant declines in their market caps since 2010, the total value of the TTSE is growing.
The three largest companies listed on the TTSE are Trinidadian conglomerate ANSA McAL, Republic Bank Limited, and National Enterprises Limited.
The Bottom Line
While a dozen national stock exchanges can be found throughout the islands of the Caribbean, the majority of the region's trading activity is done on four, including a regional securities exchange that serves islands belonging to the Organisation of Eastern Caribbean States (OECS). Although the stock exchanges in the Caribbean are generally small and have very low trading volumes, they do provide households with an alternative to keeping money in a savings account.