Fri | Feb 28, 2020

JSE continues to sink

Published:Tuesday | March 4, 2014 | 12:00 AM

Stock market investors showed preference for manufacturing stocks, four of which topped the list of equities which gained value in the December quarter.

The overall market, however, continued to lose value.

The Bank of Jamaica (BOJ), in its latest monetary policy report released mid-February, said that for the December 2013 quarter, all the JSE indices recorded decreases ranging between 1.4 per cent and 6.7 per cent. In particular, the JSE Main Index declined by 4.6 per cent to close at 80,633.6 points.

The average monthly returns on foreign currency and domestic fixed income investments exceeded the returns on equities "delivering more attractive options to investors," the central bank noted. During the quarter, monthly returns on money market securities and foreign-currency investments averaged 0.8 per cent and 0.9 per cent, respectively, the BOJ said.

"The performance of the equities market for the review period reflected continued investor uncertainty," said the BOJ report, which also referenced the pending phasing out of junior market tax concessions, starting January 1, 2014.

Despite the decline in the JSE Main Index, market activity improved during the December quarter, with the volume of stocks traded rising by 34 per cent and the value of transactions increasing by 82 per cent.

However, the number of transactions declined by 4.4 per cent relative to the third quarter.

For the last quarter in the year, the increased market activity occurred in a context where several companies with large capitalisation stocks experienced growth in profit over the review period, the central bank said.

Financial stocks accounted for four of the 10 declining stocks with an average price depreciation of 5.2 per cent. Manufacturing accounted for four of the top 10 advancing stocks for the period with an average price appreciation of 4.3 per cent.

Within the advancing stocks, Caribbean Cement headed the list with a gain of 68.27 per cent. Trinidad Cement was next with 12.88 per cent, followed by Desnoes & Geddes with 11.60 per cent and Kingston Wharves with a 0.83 per cent uptick.

The big gainer in retail was Hardware & Lumber, up 34.96 per cent.

The BOJ noted the rush to market which resulted from discussions surrounding the continuity of the tax incentives associated with listing on the JSE Junior market. As a result, there were several Initial Public Offerings during the quarter, including Medical Disposables and Supplies, Derrimon Trading Company, and Knutsford Express Services. Knutsford, however, missed the deadline window to qualify for the full 10 years of tax breaks but will still get five years of waivers on corporate income tax.The JSE Main Market has continued to lose ground into 2014, with the index now at 76,636 points, while the combined indices is at 78,893 points at market close on Monday, March 3.

At the end of February, total market capitalisation across the indices totalled $443 billion, down from $474 billion in January. The USD market, which comprises a single stock, was the only index to post gains.