By Lavern Clarke, Staff Reporter 
Jackson and Berry
THE JAMAICA Stock Exchange saw major declines in its three indices Monday, losing as much as 880 points on the JSE Index and 1,546 on the All Jamaica Composite, a development that market experts agree is linked to high levels of uncertainty in the market.
Of the twenty four stocks that traded, Goodyear was the only stock advancing by 15 cents, three traded firm and 20 declined. The biggest loss was on the Lascelles stock which lost four dollars to close at $55. "Generally, the market feels interest rates are going higher," said Chris Berry of Mayberry Investments, adding that the market also remains unsure about what measures Government will be coming with to get the economy back on track.
"People are speculating negatively," said Berry, having noted that when the market is uncertain, investors tend to move their funds into areas where they feel secure.
The anticipated hike in rates is linked to new measures announced last Thursday by the Bank of Jamaica, mandating the banks and financial institutions to lodge 5 per cent of their Jamaican dollar deposits with the central bank.
Additionally, some $5 billion is expected to flow into the system this week as past debt matures, said Financial Analyst John Jackson, which Government is also going to have to find a way to mop up.
The decline in the stock market coincides with the Government of Jamaica's weekend offer of its newest eurobond offer, but the analysts say the impact of the seven year US$-indexed bond offer which closes Thursday, would have been minimal.
The taxable bond, fixed at 10.125 per cent, is offered in denominations of US$100 payable in Jamaican dollars at a rate of $50.1217. It matures in 2010.
The offer is unlimited in the funds it seeks to raise, and the Ministry of Finance has announced that the proceeds will help finance the budget. The budget has a $23 billion hole to be plugged.
Berry notes that it is likely that investors will go after the bond if the market anticipates a further decline in the exchange rate, and the Jamaican dollar continues to depreciate. Monday's performance of the stock exchange follows a net positive gain in the three indices last week, resulting in $7 billion of new capitalisation.
Jackson agrees that the stock exchange's decline Monday was more a function of interest rate expectations.
"Essentially, the market is in uncertain waters," he told the Gleaner, adding that there are expectations that short-term rates could increase to 22-25 per cent.
Jackson notes that the sharp decline in the stock market could have two effects in today's trading: jittery investors might be prompted to sell pushing the decline further, or it is equally likely that new buyers might come into the market to take advantage of the lowered prices, reducing the slide.
Overall market capitalisation was $302 billion at the close of trade Friday.
