Interview: Geoff Mason
What developments do you anticipate in the capital markets sector in 2012?
GEOFF MASON: POMSoX would welcome the opportunity to have greater participation in discussing ways to develop capital markets in Papua New Guinea. A strong stock market is the cornerstone of any capital market: it connects capital with investment opportunities through both the primary and secondary markets. In addition, POMSoX would like to explore the possibility of running a secondary market in government securities.
What are the rules governing foreign companies that wish to list on POMSoX?
MASON: POMSoX policy is that the bourse is open to any foreign firms that wish to list, providing they meet the requirements laid out in the POMSoX listing rules. Of the 19 listed companies on the POMSoX, 12 are dual listed. Likewise, foreign investors are welcome to invest in POMSoX-listed securities. Obviously all foreign investors are subject to the government’s foreign investment policy.
What new legislation or legal amendments are likely to be introduced – or should be introduced – to further attract investors to POMSoX?
MASON: The structure currently in place allows companies to list on POMSoX and allows the public to invest in listed securities. POMSoX always encourages investor protection, and as a whole any legislation or legal amendments which strengthen investor protection would be welcomed. The current POMSoX business rules have inbuilt protection for investors who buy or sell securities through a POMSoX participating broker, namely BSP Capital and Kina Securities. For example, client funds must always be placed in a segregated bank account. The use of such accounts by BSP Capital and Kina Securities means that under no circumstances can those client funds be used by the participating brokers for their own purpose. POMSoX carries out periodic inspections of participating brokers to test their adherence to the business rules. We would also like to point out that under current legislation only those investors who buy and sell securities through BSP Capital or Kina Securities do not have to pay stamp duty on those securities transactions.
In future, POMSoX will encourage any legislation or legal amendments to focus on greater investor protection, such as the licensing of all parties who deal in securities on behalf of the investing public. Only parties deemed fit and proper should be issued a dealing licence, and before this is issued the applicant must demonstrate that it has policies and procedures in place to protect its client. Furthermore, the holder of a dealing licence must use the services of a POMSoX participating broker to ensure its clients are offered the protection of the POMSoX business rules and fidelity fund.
Which areas have promise in terms of initial public offerings (IPO) and investment opportunities?
MASON: Investor focus is currently on the country’s hydrocarbons and resource potential, so these sectors offer direct IPO and investment opportunities. However, there are also a number of potential IPO opportunities which have not been fully explored relating to the environment. Eco-friendly industries that could provide clean drinking water or electricity through recycling would add great value to the exchange, for example.
Is POMSoX looking to enter into agreements with other stock exchange authorities?
MASON: POMSoX is currently concentrating on becoming the cornerstone of the capital market in Papua New Guinea. Once we have achieved this we may look at forming strategic links with other stock exchanges. Any such alliance would only be considered if it would benefit the country and its people.
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