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Financial News

Jun 2004 Financial News

Mayberry bullish on Jamaican economy; says stocks will climb again

Jun 28, 2004

The recent dramatic fall in the Jamaica Stock Exchange indices notwithstanding, Mayberry Investment chairman Chris Berry is touting the stock market as one of the best options available to local investors now.

Basing his advice on an optimistic forecast of the performance of the Jamaican economy, Berry said Wednesday that stock prices which seem high now would soon become bargain buys as the market takes off again and stocks climb higher.
The stock market this year peaked at 109,888 points in a four-month bull run but profit-taking by investors has halted the climb, dropping the broad JSE index back to three-month lows of 92,500 points.

Stocks also depreciated on oil price jitters, according to Mayberry analysts, as the market paused to assess the likely impact on the local foreign exchange market and interest rates. So far the forex market has performed steadily, and there is indication that interest rates may have reached their floor for now.
But expectations that oil prices could have a significant pass-through effect on prices and strongly upset inflation targets, Berry said, was not supported by his company's analysis, and would be far less than feared.
That analysis indicates that the nine per cent target is in danger of being exceeded, but did not project the likely outcome.

The current low interest rate regime meantime keeps real returns on Jamaican dollar investments at low levels. With inflation running at double digits - 14 per cent from May 2003-May 2004, according to Statin - Jamaican dollar securities are earning real returns of about three per cent, according to Kevin Richards, manager of Mayberry's asset management unit.
Stocks under the company's Performance Index are earning 11 per cent, he said, based on very conservative estimates of 20 per cent nominal returns. The MPI is averaging well over 50 per cent returns, researcher Keisa Ansine had told investors earlier.

Berry also suggests that money market investors should "stick to instruments of shorter duration" in the Jamaican dollar market for now. He is also touting US$-backed issues as good buys, though anticipated changes in US regulations could force dealers to hold less US$ investments and alter outlook for local investors, he said.

As for investors with a high-risk tolerance, the bargains now are in the emerging market securities which international traders are now dumping at attractive prices, he told the forum.

Source: http://www.jamaicaobserver.com/magazines/Business/html/20040627T010000-0500_61831_OBS_MAYBERRY_BULLISH_ON_ECONOMY__SAYS_STOCKS_WILL_CLIMB_AGAIN.asp