Tue | Aug 4, 2020

In market debut, TransJamaican falls as stocks continue slide

Published:Wednesday | March 25, 2020 | 12:23 AM

TransJamaican Highway, TJH, lost just under $3 billion in market value at its market debut on Tuesday.

The value of the shares dropped 16.3 per cent to $1.18, reducing the company’s market value from $17.6 billion to $14.7 billion at the close of trading on the Jamaica Stock Exchange, JSE.

It is rare for a stock ranked by brokers as a buy, to trade below its listing price on the JSE. But TJH’s decline aligns with the general pullback of stocks over a fortnight across all sectors of the market.

In the midst of the coronavirus crisis, there a few exceptions to the general decline, notably medical equipment supplier Medical Disposables & Supplies and Paramount Trading, which operates a bleach making plant.

On Tuesday, the TJH stock came under pressure from the first trades, with sell orders initially at $1.60. However, buyers in queue were not interested in paying more than $1.20. During the day, over 47.8 million TJH units traded, selling as low as $1 and as high as $1.39.

“I have a client who has millions worth and he told me to sell all of it at market. I hesitated because that would mean selling at $1 at the time,” a broker told the Financial Gleaner.

Sinking fears

The client feared the stock would sink further as the week progressed, plus he had already made gains in the bull market which would compensate for the loss on the investment in the toll road company, the broker said.

TJH is now a buyer’s dream, with over 553 investors trying to exit or reduce their holdings but only 16 investors in queue to buy, up to the close of trading. The current sentiment around the stock contrasts with the reaction to the February initial public offering which was oversubscribed by bullish investors. That anticipation however changed by mid-March with the market fallout.

On Tuesday, the JSE Combined Index declined by 1,261.45 points or 0.36 per cent to close at 350,140 points, a level last seen in September 2018.

On Tuesday all the indexes declined except the JSE Financial Index which advanced by 0.14 point to close at 98.26 points.

steven.jackson@gleanerjm.com