Aug 2005 Financial News

J$ slips despite BOJ's intervention

Aug 22, 2005

Last week was grim for stocks, with all three Jamaica Stock Exchange indices declining - the JSE main index shedding nearly 2.4 per cent or 2,547.54 points to close the week at 103,581.82. The JSE Select index lost 125.99 points to close at 2,743.17 points while the All Jamaican Composite feared the worst - losing nearly five per cent or 5,290.44 points to close at 101,814.15.

The advance to decline ratio also reflected the huge slippage in the market as of the 34 stocks that traded only nine advanced, while 20 declined and five traded firm.
Volume remained low with just over 18 million units traded.

Foreign currency market

The Jamaican dollar continued to lose value despite intervention by the Bank of Jamaica to shore up the currency for at least four of last week's five trading days.

The market continued to be characterised by strong broker demand and a slowing down of supply, the latter, partly due to slow tourist season which has been affected by the early arrivalof hurricanes.

Market watchers have also indicated that some investors are realigning their portfolios due to the negative impact of the inflationary trends on Jamaican dollar investments. Remittances for back to school should help supplies over the next two weeks. The Jamaican dollar lost 12 cents last week, closing at $62.65/US$1 in the cambio market.

Money market

The government went to the money market to raise through local registered stocks, $700 million last week - $400 million for six years at a coupon rate of 13.95 per cent and $300 million for 10 years at a rate of 14.25 per cent.
The thirty-day dealer rate fell by 10 basis points at the top of the range week over week closing at 12.60 to 12.70 per cent, reflecting the liquidity that persisted despite the presence of the two LRS instruments.


Company news

Desnoes and Geddes recorded an increase of 51.6 per cent or $800 million in profits for the year ended 30th June 2005. The increase was due primarily due to a $400 million gain on the disposal of land. Another contributing factor was a 16 per cent increase in sales. The higher sales revenues were due mainly to a 31 per cent increase in export sales as domestic sales were flat.

Local economic news

The Statistical Institute of Jamaica reported that inflation for the month of July was 1.6 per cent, up from 1.5 per cent in June. The 12-month point to point inflation to July 2005 is 18.2 per cent. The inflation rate for calendar year 2004 was 13.7 per cent.

The government has said that the revised inflation target of 13 to 15 per cent may not be attainable due to impending increases in bus fares, electricity rates, water rates and rising global fuel prices.

The net international reserves of the Bank of Jamaica slipped by US$7.5 million in July to US$2.149 billion, representing 21 weeks of imports of goods and services.

Observer Business Reporter
Monday, August 22, 2005
http://www.jamaicaobserver.com/magazines/Business/html/20050821T200000-0500_86654_OBS_J__SLIPS_DESPITE_BOJ_S_INTERVENTION.asp