Thu | Dec 8, 2016

Market volatility the new normal - Oppenheimer head

Published:Friday | January 23, 2015 | 12:00 AM

Avia Collinder, Business Reporter

Gregory Fisher, managing director of Oppenhemer & Co Inc, says Jamaica is due for a further ratings upgrade which, in turn, will continue to cement its rankings in the international investing community and support the performance of its bonds on the global market.

Speaking during the opening ceremony of the Jamaica Stock Exchange Capital Markets Conference in Kingston, Fisher proposed that a future upgrade will follow continued adherence to the economic reform progamme backed by the International Monetary Fund (IMF), which has seen the island passing six tests to date and is in line to hurdle a seventh.

"Credibility with the ratings agencies has been greatly accelerated," he said. The successful raising of US$800 million in eurobonds at mid-2014, he said, showed that the investing community is satisfied with Jamaica's steady progress.

Fisher also noted that Jamaican bonds have produced comparatively high returns year-to-date, besting other emerging market products.

Citing returns as high as 21.2 per cent, he said "if you invested in Jamaica, you were handsomely rewarded," noting that performance was connected to "strict adherence to the IMF programme".

Speaking more broadly to international market trends, Fisher said that volatility was the new normal on United States stock exchanges, as investors try to respond to the end of quantitative easing.

"Embrace it," he advised, even while noting that investors should also be on the lookout for undervalued assets, which will become plentiful as some panic.

"The US Federal Reserve has ended it's programme of quantitative easing and now the market is forced to deal with it. Since mid-2015, stock markets in the United States have been under a siege with massive amounts of daily volatility," said Fisher.

The investment expert said that the falling price of oil was not a main contributor to market volatility. "I have no idea where crude is going to end up," he said, suggesting that it was irrelevant unless one was an oil trader, and that one outcome might be that OPEC regains its monopoly.

"The volatility will continue as the main feature of 2015. It is nothing more than a market trying to understand how to survive without the Fed as the ultimate backstop ... a Fed-less market is causing great trepidation and a massive amount of uncertainty. The global investment market is just plain confused," he said.

Some of the confusion, he added, relates to uncertainty as to when the Fed will begin to tighten its monetary policy.

Investors, he noted, will have to revert to understanding and responding to market fundamentals.

And, they should embrace volatility as a norm for 2015 rather than an anomaly.

"For seasoned investment professionals, it's time to be utterly diversified when it comes to asset deployment" across the global spectrum, Fisher said.

avia.collinder@gleanerjm.com