Apr 2014 Financial News

Big-cap stock eliminates a quarter of market wealth (Jamaica)

Apr 30, 2014

The Jamaica Stock Exchange (JSE) says the massive drop in market capitalisation on its main index in March was due largely to the delisting of CIBC-FirstCaribbean International Bank.

The main market lost $113 billion of wealth, of which close to $108 billion was due to FirstCaribbean's exit.

The Barbados-based regional bank first telegraphed plans to delist its 1.525 billion stock units in February - a decision it said was linked to the JSE's assessment that it was in breach of Rule 402 relating to holdings of ordinary shares.

"The Jamaica Stock Exchange notified the bank that it did not meet the minimum listing requirement, that is, the percentage of shares held other than by the bank's majority shareholder was less than 20 per cent, and the average total traded volume for the 36 months before we received the correspondence from the JSE was below two per cent," the bank explained in February.

Its Jamaican subsidiary previously delisted from the JSE in 2011.

The regional banking group remains listed in its home market, Barbados, as well as Trinidad and the Eastern Caribbean. Its exit from the Jamaican stock market comes three months behind that of another cross-listed financial conglomerate, Guardian Holdings Limited of Trinidad, in December 2013.

LARGEST DAILY VOLUME

FCIB was trading at more than $70 per unit at delisting, falling from $90 at the start of the year. The stock traded about five times in 2014, with the largest daily volume amounting to 53,375.

With FCIB gone, market capitalisation - which estimates the value of the wealth held by stock market investors - declined to $297.8 billion, down from $410.8 billion at the end of February.

As to what caused the rest of the loss of market value in March, the JSE was not too sure.

"We cannot speak authoritatively, though, to what caused the fall in prices that removed the other $6 billion," said deputy general manager, Robin Levy.

"We don't know why prices are falling, but they are," he said.

The main market index closed the month of March at 75,557.56 points, but has since regained some of its momentum to close at 76,935 points on Monday. But that's still well below the 81,986 points recorded one year ago.

"To date, in April, the market is just about flat. It's up some days, down on others - its just about flat," Levy said last Thursday.

Loss leaders in the first quarter were Supreme Ventures, Pulse, Kingston Properties, D&G/Red Stripe and Sagicor Group.

Discounting Ciboney, which trades for pennies, the biggest gains were made by C&WJ/LIME Jamaica, Hardware & Lumber, Caribbean Cement, Sagicor X Fund and JSE.

Taken together, the market cap across the three indices at the end of March - main, junior and USD - topped $331 billion. That's down 36 per cent from an estimated $517 billion at March 2013.

Both the junior market and the USD market were resilient in March, holding steady at $28 billion and US$53.09 million, respectively, relative to February. Relative to March 2013, the junior market added more than $6 billion of value, while the USD market gained more than US$20 million.

A second USD stock, Margaritaville Turks, was listed in April.


Source:
Avia Collinder, Business Reporter
avia.collinder@gleanerjm.com
Jamaica Gleaner
Wednesday April 30, 2014

http://jamaica-gleaner.com/gleaner/20140430/business/business6.html