Investing in the Jamaican stock market from overseas

Published: Sunday | March 10, 2013 Comments 0

Oran A. Hall, Contributor

I enjoyed reading your article in The Sunday Gleaner dated March 3, 2013. I am very interested in getting more information on investing in the stock market in Jamaica, I am currently living in North America and am no stranger to the stock market but have never invested in Jamaica. I am not interested in short-term gain and don't want to become a trader. I should be retiring in the near future and plan to make Jamaica home. Please also send me information on the different types of investment funds available in Jamaica and how they work.

- Danny

FINANCIAL ADVISER:

There is little difference between a Jamaican resident and a non-resident buying stock in Jamaica, and pretty much the same rules and processes apply regardless of the stock being bought.

A resident of a foreign country who is investing in Jamaican stocks must first open an account with a local stockbrokerage firm. Client agreement forms are available online. The form must be printed and sent to the brokerage house with an original signature. The following are also required: a notarised copy of the investor's identification, two references, proof of address, and a copy of the social security card for US residents or social insurance card for Canadian residents.

The website of the Jamaica Stock Exchange (JSE) - www.jamstockex.com - has a wealth of information on the market, including the list of brokers.

You can also source information on the market from the websites of the 11 broker-members of the exchange and from the reports in The Gleaner publications and the rest of the media. Here, nonetheless, is some general information.

Trading takes place on the JSE Mondays to Fridays between 9:30 a.m. and 1 p.m. on a computerised platform. Transactions are settled three days after the execution of the order by your broker, who will supply you with a contract note giving details of the trade.

It is advisable to put all instructions to your broker in writing and to monitor your account regularly.

Although you may request a physical certificate, today's norm is for holding securities in electronic form, which is facilitated by the Jamaica Central Securities Depository. This enables transactions to be processed by book entry.

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It is a convenient way of changing the ownership of securities between seller and buyer. The depository is able and willing to confirm what it is holding for each client and issues regular statements of the holdings of its clients.

There are four unit trusts in Jamaica, and they operate several diversified investment funds. Unit trusts are similar to mutual funds and issue and redeem units when investors want to buy or sell units, respectively.

Unit prices are calculated regularly and are published on the web sites of the unit trusts.

JMMB Fund Managers Limited has three funds. The Income and Growth Fund invests primarily in ordinary stock but also in fixed income securities. The Giltedge Fund invests in Government of Jamaica long-term and short-term interest-earning securities; and the Optimum Capital Fund invests in stock, commercial real estate, and fixed-income securities.

Scotia Investments Jamaica Limited has four funds. Its Premium Money-Market Fund invests in money-market securities, as its name suggests. Income earned may either be automatically reinvested in new units or deposited into the investor's Scotia account.

The Premium Fixed-Income Fund invests in short-term and long term Government of Jamaica securities and local and overseas bonds, certificates of deposit, and commercial paper while the Premium Growth Fund invests in local and regional stocks and money-market securities. Its Caribbean Income Fund is a US-dollar fund that invests in bonds issued by companies and governments in CARICOM.

Barita Unit Trust has two funds: the Money Market Fund invests primarily in long-term and short-term Government of Jamaica securities while the Capital Growth Fund invests primarily in ordinary stock but also in fixed-interest securities.

Sagicor Investments offers a suite of 10 funds. Four are fixed-income funds, which invest primarily in sovereign debt but they vary nevertheless. For example, one is inflation-indexed and another invests in US-dollar-denominated sovereign and corporate debt. There is a real estate fund with investments in the Caribbean; a balanced fund, which invests in various types of securities; and three equity funds, one of which is local, another regional, and the other global.

You will notice that there are funds to satisfy a variety of investment objectives - preservation of capital, capital growth, income, exchange-rate hedge, liquidity, ease of management, tax minimisation - and you will notice that some are diversified by type of security and by market.

Investors may invest in more than one type of fund if, by so doing, they can structure their investments in the way that best enables them to realise their investment goals.

They may also buy units in more than one unit trust to capitalise on the varying investment styles and expertise of managers and as a means of managing risk.

Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of "The Handbook of Personal Financial Planning", offers free counsel and advice on personal financial planning. inviser.jm@gmail.com

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