David shipley

DAVID SHIPLEY

Telegraph-Journal

Published Tuesday October 23rd, 2007

Appeared on page B1

New Brunswick should make its investment environment more inviting before it considers the

potential benefits of a regional stock market, says a business professor.

"The fundamental issue is attracting investment," said Saiful Huq, an associate professor at the

University of New Brunswick Saint John.

Huq said Monday that New Brunswick should focus on tax policies that encourage both residents

and outsiders to invest in provincial firms.

"They won't buy (just) because they like the province," said Huq Monday. "You can park your

money in any part of the world nowadays."

Huq said among the biggest challenges to the creation of an Atlantic Canadian stock exchange are

whether it would have enough companies and investors to sustain a sufficient volume of trades.

Favourable tax policies that make New Brunswick an attractive place to invest is one way to build

up the province's, and the region's, ability to support an Atlantic stock, he said.

Last week Earl Brewer, founder of retail real estate firm Plazacorp (TSXV: PLZ.V), said it may be

time for Atlantic Canada to develop its own stock exchange.

Brewer said such an exchange could help the region attract more of the investment dollars that

currently flow from Atlantic Canada into other markets. An eastern market could also make it

easier for Atlantic Canadian companies to go public, he said.

The Atlantic stock market could be a virtual or electronic alternative exchange, he suggested.

"You can have a regional market but whether it can survive on its own "¦ is a point that needs to

be addressed," said Huq.

Once Atlantic Canada increases the number of firms that are attracting angel and venture capital

it may be easier to support such a regional exchange, Huq said.

"If you raise capital through angel investment, the eventual goal is to go public," he said. "A lot of

venture capitalists are looking for an exit strategy."

The New Brunswick Securities Commission has focused its capital growth efforts on encouraging

more angel investment in the province.

Angel investments allow early-stage companies to grow to the point at which they can attract

larger venture capital funds and eventually become large, publicly-traded entities.

Elizabeth Beale, president and chief executive officer of the Atlantic Provinces Economic Council,

said Monday that, while the Halifax-based think tank has examined securities issues in the region,

it hasn't explored the idea of a regional stock exchange.

Beale said many of the potential problems for a regional exchange result from its relative small

size compared to the overall global marketplace.

"Even a Canadian exchange is small on a global scale," she said.

Beale said that, while there is room for smaller, specialized or junior exchanges, many investors

would be drawn to the larger, more established bourses.

The challenges to developing Atlantic Canada's economy involve more issues than just increasing

access to capital, she said.

"It seems to have a lot to do with the structure of the economy. That we have a small group of

multinationals, many of whom, not all, are privately held," she said.

"We have a larger group or smaller group of companies, but we really don't have much in the

middle."

Atlantic Canada must find out why it has a dearth of mid-size companies, she said.

"Do we have an attractive regulatory environment? Are we too restrictive on that front, to we

make it too difficult for small companies to grow?" she said.