Wed | Aug 23, 2017

Holness urges investment over consumption

Published:Thursday | January 26, 2017 | 1:01 AMSteven Jackson
Prime Minister Andrew Holness

The advice was a bit unusual coming from a head of government.

Buy shares rather than Brazilian hair, said Prime Minister Andrew Holness, at the opening ceremony for the annual JSE Capital Markets Conference on Tuesday night.

He was making a larger about the importance of investment over consumption.

The Jamaican Government wants more low income Jamaicans owning shares of listed companies on the Jamaica Stock Exchange (JSE). As part of its contribution to development of the local capital markets, the Government itself has said it plans to divest and list some state assets on the JSE, allowing more Jamaicans the opportunity to buy into those companies.

The top considerations include National Water Commission (NWC).

"So if it were to come to pass where some of the aspects of the NWC are privatised, who will own it? We would expect that the Jamaican people, instead of investing in Brazilian hair that we invest in some shares," he said, while giving the main address at the conference Tuesday night in New Kingston.

In July 2016, the Holness administration announced plans to consider selling aspects of NWC, but critics argue that privatising the water utility would increase water rates for the poor and vulnerable. Still, the utility operates with one of the heaviest capital and recurrent budgets.

Holness said in his speech that as legislative amendments allows for greater stock portfolio investments by pension funds and insurance funds then more Jamaicans will indirectly get involved in the JSE. At that point they may start choosing stocks as investments rather than putting all their money into bank savings, the PM suggested.

"Because that is how we are going to move from poverty to prosperity," Holness said.

Also speaking at the opening ceremony, Gregory Fisher, the managing director of American firm, Jefferies, said that the election of Donald Trump resulted in the US equities market jumping seven per cent, with stocks trading at 20 times earnings. Jefferies is a sponsor of the conference.

"It is my opinion that the US stock market has priced in a total perfect presidential four years. And we all know that never happens," Fisher said, while adding that he remains cautiously optimistic of Trump's presidency.

The JSE conference continues until Thursday.

steven.jackson@gleanerjm.com