Jan 2006 Financial News

Stocks make wobbly start to New Year - Jamaica

Jan 09, 2006

The shortened New Year's trading week saw the stock market making a wobbly start with all three Jamaica Stock Exchange market indices moving "south".

Of the 31 stocks that traded, only four advanced, while 25 declined and two traded firm.

Market volume was a mere 10.9 million units led by JMMB with 2.3 million units which accounted for 21.87 per cent of all trades. This was followed by Cable & Wireless Jamaica with 1.7 million units or 15.73 of the volume, and Gleaner Co whose 740,00 units accounted for 6.77 per cent of the market volume.

The JSE main index lost 2,288.41 points or 2.24 per cent to close at 102,221.98. The JSE Select Index slipped by 88.53 points or 3.20 per cent to 2,771.06 points, while the All Jamaican Composite Index shed 4,745.49 points or 4.74 per cent to close at 100,196.10 points.

Foreign currency market

The price of the United States dollar rose sharply in the first two of the four-day trading week, as the supplies were inadequate to satisfy the robust broker driven demand.

The Bank of Jamaica intervened on the latter two trading days, thus stabilising the rate. In the end, the Jamaican dollar lost 24 cents week over week to close trading at an average of $64.80/US$1 on the cambio market.

Money market

The money market was relatively quiet all of last week, with the 30-day dealer rate closing the week up 10 basis points on the lower end of the range to 12.85 - 13 per cent. The overnight market closed the week with rates ranging between eight and 11per cent or 100 basis points lower at the top and 100 basis points higher at the bottom of the range than the previous week.

Local company news

Ciboney Group bounced back from a $15.2-million, six-month loss to November 30, 2004, to post an $11-million profit during the comparative period in 2005 - June 1 to November 30.

The profit growth was despite a 21 per cent fall in revenue. Profit was driven by a gain on exchange of $14.4 million, and a 30 per cent reduction in loan interest.

Local economic news

As the Cabinet sat down to deliberate on the 2006/7 budget last week, news broke that the fiscal deficit had widened to $24.9 billion with a third of the financial year in 2005/6 remaining. The shortfall in tax revenues increased to $12.5 billion for April 1 to November 30, 2005. Expenditure continued to be tightly held - at $5.5 billion inside the budget. The weak revenue performance forced the government to borrow $9.5 billion more than originally programmed.

GCT accounted for the major portion of the slippage in revenue, trailing its target by over $7 billion. Revenues from income and profits also lagged by some $3.8 billion , mainly due to anaemic performance from taxes on interest earned from deposits.

Caribbean economic news

Barbados runs the risk of having its credit rating downgraded by the prestigious Standards and Poor's international rating agency in the next twelve months. Its current rating of BBB Plus is one of the highest in the developing world.

The rating agency is concerned about the government's deficit, which is currently about fifty per cent of the gross domestic product . The agency has indicated that Barbados, a small country that is vulnerable to external developments, is accumulating debt quickly. It says the government needs to exercise more control over its spending. If the country's credit rating is downgraded, it would increase its cost of borrowing further, according to Barbados media reports.

Caribbean business news
After stellar performances in 2004, the regional stock markets had a more subdued year in 2005. At home, the Jamaica Stock Exchange Index suffered a 7.23 per cent decline in 2005 when compared with 2004. In the twin island republic, the all Trinidad & Tobago Index lost 0.67 per cent.

The Barbados Stock Exchange index was the most successful of the indices of the three major regional exchanges, advancing by 5.83 per cent in 2005.

International economic news

Trade between China and Africa jumped by 39 per cent during the first 10 months of 2005, registering over US$32 billion. This increase is being driven by China's seemingly insatiable appetite for oil, to fuel its rapid economic growth.
Since 2003, China has overtaken Japan as the world's largest consumer of petroleum products outside the United States.

China has been building stronger economic relations with the African continent, scrapping tariffs on 190 types of goods imported from 28 of the least developed African countries.
Chinese firms have also increased their investments in Africa, especially in the oil sector. For the first ten months of 2005, Chinese companies invested US$175 million in African countries. Oil rich Sudan has been the greatest beneficiary.

The Jamaica Observer
Monday, 9th January, 2006
http://www.jamaicaobserver.com/magazines/Business/html/20060108T210000-0500_96235_OBS_STOCKS_MAKE_WOBBLY_START_TO_NEW_YEAR.asp