Cave issues caution about equity returns

A CAUTION has been sounded that the prospects for equity returns in the Caribbean are going to be less promising than is the case in other global markets.
The caution has been raised by Roger Cave, Investment Director, as he discussed the performance of the Fortress operations for the financial period to September 2021.
In his report, Cave said that while 2021 was a strong year for global equity markets, they are now at a point where headwinds in some areas may lead to lower future returns.
According to him, slower economic growth, the possibility of tighter mon- etary policy, and high valuations in many parts of the world, may bring stock market returns to more normal levels in the coming years.
Turning his attention to the Caribbean, Cave indicated that they do expect the pace of recovery will improve in the coming year as long distance travel and tourism improve.
“But significant economic challenges remain for the region, especially with the additional burdens created by the pandemic,” Cave said in his Director’s report.
He acknowledged that this would not necessarily be a problem for equity investors if share prices in the region were cheap.
Noting unfortunately that this is not the case, Cave said that shares in the Caribbean are on fully valued, trading in many cases at significant premiums to where much larger companies with similar operations trade elsewhere in global markets.
“As a result, we must remain extremely selective in our regional holdings, concentrating on the few large, profitable, well-run companies whose shares will trade at reasonable valuations,” according to the Director. “We still see good prospect from these individual holdings, largely in Trinidad and Tobago, and Guyana, he added.