Mon | Sep 28, 2020

Stock market wealth tops $2 trillion

Published:Sunday | January 12, 2020 | 12:00 AM
Headquarters of the Jamaica Stock Exchange, Harbour Street, Kingston.

Eleven stocks made triple-digit gains on the Jamaica Stock Exchange, JSE, last year, and the market racked up a new record having topped 500,000 points for the first time.

Market analysts expect stocks to maintain vibrancy in 2020, given pending and expected listings and investor interest in equities.

One of Jamaica’s largest brokerages, NCB Capital Markets Limited, expects the stable economic outlook on Jamaica’s economy, continued optimism among investors and consumers, and upcoming listings of state and private entities, to add momentum to the market.

The Government of Jamaica has already announced plans to list its interest in power utility Jamaica Public Service Company (JPS), Jamaica Mortgage Bank and toll concessionaire TransJamaican Highway.

“These transactions are expected to take place early in 2020 which is already a sign that the new year will likely be at least as vibrant as 2019,” said NCBCap in a notice to investors.

“Overall, the local market is expected to see continued growth and development throughout 2020,” the brokerage said, even while noting that “the stock market is also exposed to risks including social issues such as crime and violence, which continues to hinder growth and business confidence.”

12 more companies

Twelve companies joined the JSE in 2019. Most of the listings were large main market companies which reflected a shift towards larger capitalised entities instead of smaller junior market listings.

In 2019, the main market increased by more than 120,000 points or 34 per cent to close the year at 509,916 points, the junior market closed up 3.15 per cent at 3,246 points, and the USD Index gained nearly 42 per cent to close at 226 points.

That level of activity served to push stock market wealth, as measured by market capitalisation, above $2.1 trillion as at December 31, more than $1.9 billion of which resides in main market stocks, and $151 billion in junior stocks.

Leading the gains were new listed junior companies, Fontana and The LAB. Fontana Limited, which operates a chain of pharmacies across Jamaica, increased 273 per cent on its initial public offering price of $1.88 to close the year at $7.02. The stock benefited from strong growth in Fontana’s earnings but also a projection that its cash flow would increase with the opening of its new location in Trafalgar Square and the completion of roadworks in Barbican that had impacted the store there.

The Limners and Bards Limited, which runs an advertising and marketing agency and trades as The LAB, listed at $1 in the year and closed up 200 per cent at $3. The company run by Kimala Bennett also benefited from increased earnings from core and new services.

Other stocks which made triple-digit gains included the Jamaica Stock Exchange, up 168 per cent in the year to close at $27.58; Victoria Mutual Investments Limited, up 134 per cent in the year; Sygnus Credit gained 136 per cent; Wisynco Group 113 per cent; MailPac Group, which was also a new junior market listing, gained 109 per cent, Radio Jamaica gained 105 per cent; while Pulse Investments, Palace Amusement and General Accident Insurance all rose 100 per cent.

The JSE stock itself was fuelled by increased trading on the market from new and existing stocks.

In addition to the triple-digit performers, more than 20 stocks made gains above 10 per cent. The JSE combined market now comprises more than 90 listed and cross- listed ordinary stocks, and about two dozen preference stock listings.

So far this year, the combined market has given up some of its 2019 gains, closing Friday at 498,510 points. That’s a decline of 1.33 per cent year to date.

steven.jackson@gleanerjm.com