Convergence of Caribbean stock exchanges/Convergencia en las Bolsas de Valores del Caribe/Convergence des Bourses Caribeennes

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Date: Mar. 2012
From: Social and Economic Studies(Vol. 61, Issue 1)
Publisher: University of the West Indies, Sir Arthur Lewis Institute of Social and Economic Studies
Document Type: Article
Length: 3,329 words
Lexile Measure: 1550L

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ABSTRACT

This paper uses daily data for market returns as well as for the cross-listed securities on the three main stock exchanges in the Caribbean--the Barbados Stock Exchange, the Trinidad and Tobago Stock Exchange and the Jamaica Stock Exchange--to examine the beta-convergence and sigma-convergence of the markets. The results suggest that with respect to sigma-convergence, while the markets are becoming increasingly integrated, the convergence of the returns of the cross-listed securities is debatable, indicating some degree of information asymmetry. The findings of the beta-convergence models imply that the speed of convergence is still rather slow in comparison to other markets throughout the world.

Este trabajo se basa en datos diarios sobre los retornos de inversiones en el mercado y sobre las garantias comparadas de las tres bolsas de valores principales en el Caribe--la Bolsa de Valores de Barbados, la Bolsa de Valores de Trinidad y Tobago y la Bolsa de Valores de Jamaica--a fin de analizar la betaconvergencia y la sigmaconvergencia de los mercados. Los resultados sugieren que con respecto a la sigmaconvergencia, toda vez que la integracion de los mercados se torna cada mas creciente, la convergencia de los retornos de inversiones de las garantias comparadas es discutible y se indica cierto grado de asimetria en la informacion. Los hallazgos a partir de los modelos de betaconvergencia implican que la velocidad de la convergencia es aun lenta en comparacion con otros mercados a traves del mundo.

Cet article se sert de donnees quotidiennes de rendement sur les marches boursiers et sur les titres listes sur les trois bourses de la Caraibe--la Bourse de la Barbade, la Bourse de Trinite et Tobago et la Bourse de la Jamaique--afin d'examiner la beta-convergence et la sigma-convergence des marches. Les resultats suggerent qu'en matiere de sigma-convergence, si les marches sont en phase acceleree d'integration, la convergence des rendements des titres inscrits a plusieurs bourses est contestable, ce qui indique un certain degre d'asymetrie des informations. Les conclusions du modele de beta-convergence laissent a penser que la convergence est encore assez lente comparativement a d'autres marches dans le monde.

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The three main stock exchanges in the Caribbean--the Barbados Stock Exchage (BSE), the Jamaica Stock Exchange (JSE) and the Trinidad and Tobago Stock Exchange (TTSE)--have been seriously considering combining their markets into one Caribbean stock market in order to surmount some of the challenges they have faced in their 30-odd years of existence. As extremely small markets by internatonal standards, the first major challenge has been their struggle to attract new listings. The largest market of the three is the JSE, with 39 ordinary shares registered at the end of 2008, while the smallest market, the BSE, had only 24 ordinary shares listed.

There are a number of reasons why there are so few companies opting to register on the exchanges. One that has been debated publicly is the difficulty some firms face when trying to meet the listing criteria. Since the vast majority of Caribbean companies are small, and the total number of firms...

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Gale Document Number: GALE|A356266211