Equities underperform money market, USD securities
Continued weak investor interest in the equities market is linked to competing higher returns on money-market instruments and capital gains on foreign currency investments, according to the Bank of Jamaica (BOJ).
Returns on Jamaican dollar money-market securities and capital gains on foreign currency investments were 4.0 per cent and 8.9 per cent, respectively, relative to losses of 17.4 per cent on equity investments for the year ended September 2014, the central bank said in its Quarterly Monetary Policy Report released November 18.
The BOJ's own variable-rate Certificates of Deposit were counted among the instruments with more "attractive premiums" by the central bank.
There were overall declines across all indices of the Jamaica Stock Exchange (JSE), quarter-over-quarter, ranging between 5.8 per cent and 26.2 per cent.
"In particular, the JSE Main Index fell by 14.5 per cent to close at 72,238 points relative to a fall of 18.6 per cent for the year ended June 2014 and a decline of 3.1 per cent, on average, at end-September for the previous five years ," the bank said.
"The performance of the equities market for the review period reflected continued weak investor confidence notwith-standing positive macro-economic developments," the bank commented, citing targets met under structural benchmarks under the IMF Extended Fund Facility up to the June quarter and a revision of Jamaica's outlook from stable to positive by the Standard & Poor's ratings agency.
The central bank noted that finance companies accounted for three of the top 10 declining stocks in the September quarter, recording an average price depreciation of 31.4 per cent in the context of mixed earnings performance of companies in this category.
In contrast, the BOJ said, manufacturing stocks accounted for four of the top advancing stocks, with an average price appreciation of 9.4 per cent.
Despite the overall decline in the JSE Main Index, there were improvements in some market indicators, including the value of transactions which rose by 11.8 per cent, and volume of stocks traded, up 20.8 per cent.
The central bank said that the increase in the market performance indicators late in the review period was largely attributable to National Com-mercial Bank Jamaica Limited and subsidiary NCB Capital Markets Limited's disposal of their 32.6 per cent shareholdings in Kingston Wharves Limited. The transaction was reportedly valued at around $3 billion.