Business
Jamaica stock market posts positive results
The good performance is good news since it signals high investor confidence.
The ‘Finance and Other’ category accounted for six of the top 10 advancing stocks recording average price appreciation of 25.8 percent and 117.6 percent, respectively.
Stocks from Manufacturing and Communications accounted for the highest price depreciation among the 10 top declining stocks, recording average price declines of 20.2 percent and 25.1 percent, respectively, for the quarter.
With respect to monthly returns on the Main JSE Index for the quarter, the performance averaged 0.8 percent. The Central Bank’s QMPR observed that this compared favourably to average monthly returns of 0.5 percent from money market securities and a capital appreciation of 0.06 percent on foreign currency investments.
Additionally, during the review period, several announcements were made by the JSE including the listing of Honey Bun Limited (HONBUN) and the intention of National Commercial Bank Jamaica Limited (NCBJ) to cross-list on the New York Stock Exchange.
Since these announcements, the share prices of HONBUN and NCBJ have appreciated by 2.9 percent and 9.7 percent, respectively. Correspondingly, on June 29, 2011, AMG Packaging and Paper Company Limited, a box manufacturing company, issued its Initial Public Offer (IPO), which had an oversubscription rate 3.7 times the initial offer.
The Central Bank’s analysis of the performance of the stock market for the review quarter identified several developments, which sustained interest in the equities market. These included the continued decline in rates on domestic fixed income securities, stability in the foreign exchange market and “better than expected earnings” which served to increase the attractiveness of equity investments.
“This performance was influenced by a continued decline in relatively stable interest rates, sustained stability in the foreign exchange market and positive corporate earnings of several listed companies during the review period relative to the prior quarter,” the report stated.
The performance of the market also reflected the level of liquidity in the market reinforced by the appetite of investors seeking attractive investments in the emerging low interest rate environment. The high level of liquidity was reflective of limited Government activity in the money markets, the report noted further.
Other developments identified by the Central Bank report included the disclosure by the JSE of a new trading platform to be implemented by end-2011 and the planned listing of Proven Investments Limited (PIL) on July 14, 2011 on the Main JSE.
In addition, the Board of Directors of Pan-Jamaica Investments Trust Limited (PJAM) and First Jamaica Investments Limited (FJI) announced that both companies have entered into an arrangement whereby all the assets and liabilities of FJI will be transferred to, and vested in, PJAM.
In comparison to the two other major stock exchanges in the region, the report pointed to mixed results for the quarter ended June 2011. In Trinidad and Tobago, the Composite Index advanced by 8.9 percent relative to growth of 4.4 percent in the prior quarter.
“This positive result for Trinidad and Tobago can be attributed to favourable earnings performance in addition to subdued repo rates. For Barbados, the Local Index declined by 0.8 percent compared to growth of 10.0 percent for the March 2011 Quarter,” the report said.
