By VERNON CLEMENT JONES, Guardian Business Editor

A local financial advisor is suggesting this year's $400 million-plus value decline on the BISX All Share Index, is in large part owing to investor need for cash and just perhaps a reflection on how much more onerous qualifying terms at some commercial banks have become.

"Selling investments in securities is a lot easier than going to the bank, where lending terms may now be more strenuous," Providence Advisors head Ken Kerr told Guardian Business Tuesday. "There they don't have to ask anyone's permission.

"BISX value declines are a reflection on the retail investors' need for liquidity and perhaps an indication of lending terms now more rigidified."

The All Share Index has in fact seen a precipitous value drop of nearly 12 percent since the first day of trading this year. What's left after that $400m slide is market capitalization of about $3.5 billion.

Heavily weighted to financials, the index's declines don't necessarily reflect the performance of that group of retail banks and insurance companies, argues Kerr, suggesting that with few exceptions the fundamentals of those companies remain sound even despite a downturn in the local economy. The latter is the direct result of a falloff in visitor arrivals as Americans deal with their own economic crisis and its curtailing effect on travel. That harsh reality and the general worry it has created amongst Americans continue to play havoc with the wages of Bahamian hospitality workers as hours at hotels and other tourism centers get cut back and unemployment rolls continue to grow. While some of those workers may in fact have securities investments on BISX, most of the exchange's retail investors — drawn from corporate Bahamas — have likely been spared that kind of direct economic hit. That relatively safer position hasn't however kept many from selling up stocks at lower prices in order to meet immediate liquidity needs that banks, themselves, may be increasingly unwilling to meet.

According to the latest numbers from the Central Bank, for January to August, "private sector credit growth narrowed by 20.5 percent to $255.5 million, as net lending for mortgages and consumer credit were curtailed by a little more than one-quarter to $145.3 million and $94.9 million, respectively." It was also quick to point out that problems around liquidity in the system are not driving the declines.

Over the last three months, directors at several commercial institutions have reiterated commitments to vociferously vet loan application given a spike in delinquency rates. Among consumer loans, for example, arrears have grown by 19.1 percent during the first eight months of the year, commercial mortgage delinquencies up by a whopping 50 percent.

The spikes may best explain stepped-up lender prudence and the effects that may have had on any investor's willingness to part with securities at reduced prices in order to increase personal liquidity needs.

Still, Kerr suggests BISX's larger institutional investors, most prominent among them this country's pension funds, have adopted a long-term view, prepared to maintain the bulk of their equities rather than sell up in order to escape an increasingly volatile local market.

They may in fact have very little choice given the relatively teeny investor pool in this jurisdiction. It's also one relatively closed to foreign participation.

"The market isn't of sufficient size to allow for any mass selling," he said.