Jamaican companies ought to be listing at about 10 times the current rate, according to Gary Peart, CEO of brokerage firm Mayberry Investments, who says the blockade resides in the 'culture' of private business ownership, which is largely unshaken notwithstanding the tax breaks that await junior companies.
Peart, who is also the CEO of Mayberry Investments Limited, said there is no reason the three-year-old junior market is not seeing listings of up to 50 companies per year.
Mayberry has been the lead broker on the majority of the 13 junior IPOs to date.
The Jamaica Stock Exchange (JSE) expects just five junior listings this year, down from the original projection of eight in January.
Music publishing start-up C2W listed earlier this year and will be followed by entertainment company KLE Group later this month.
Other pending IPOs include Consolidated Bakeries, chemical firm Paramount Trading Limited, financial start-up Exponential Holdings and loss adjusters Priority Group International.
"Our stock market is nowhere near its potential. People are speaking of listing maybe five companies this year. We should be listing 30 to 50 companies per year," Peart said at a Gleaner Editors' Forum last Wednesday.
The junior market launched in 2009 offers medium-sized firms the opportunity to raise up to J$500 million along with tax concessions extending 10 years.
Pre-tax profits for the listed group have grown by an average of 322 per cent, according to JSE estimates. And the stock market value of the 13 is just shy of J$26 billion.
Last year, junior market stock gains surpassed 100 per cent, which was among the highest returns in the world. Despite its success, local firms are still reluctant to list, Peart said.
"We need to find a way to make people understand the greater benefit of the stock market. You have a situation where there is a tax benefit for companies. Why are we still struggling to have one or two companies," he asked.
Earlier this year, some investors feared that the cash-strapped Government would remove the tax concession seen as the main impetus for listings. The Government will instead revisit the tax in 2017.
The current policy waives all corporate tax for new junior listings for five years, and 50 per cent in the next five.
"Government has put the incentive in place. Now the owners need to recognise it," Peart said. "Why are you staying private and paying tax of 33 per cent when you could list on the junior market."
John Mahfood, whose firm Jamaican Teas, is among the listed, agreed that there ought to be at least 10 times more stocks on the junior market listing board.
"You should have five or 10 listings a year so you get to a stage where you have 150 companies," he said, which would increase the depth of the market.
JSE General Manager Marlene Street-Forrest said at the forum that junior listings since 2009 has been responsible for J$2.1 billion of capital formation.