Feb 2016 Financial News

Election having little impact on stock market – stakeholders (Jamaica)

Feb 19, 2016

AS stock markets around the world have been hit by the low price of oil, locally the stock market appears little affected by either that or the uncertainty of upcoming elections.

Stakeholders in the local capital markets say they are seeing no indication that activity on the Jamaica Stock Exchange (JSE) is being affected by the electoral process now in train, as the island prepares for a general election on Thursday February 25.

Greig Lindo, senior trader at JMMB Ltd, said Wednesday that the market is plugging away with the same energy with which it ended the year in 2015.

“The market has continued the up[ward] trend where it left off in 2015, with the Jamaica Stock Exchange combined index increasing 7.83 per cent year to date (December 31, 2015 - February 16, 2016). Trading activity remains buoyant with a number of companies reporting their earnings during February,” he stated.

Lindo said that, in truth, the uptick on the JSE is expected for mid-2016.

“The IPO market is expected to pick up with the planned listing of JSE’s Jamaica Depository Receipts later this year. In addition, the Government’s pending decision on the possible extension of tax incentives to new Junior Market listings will likely have an impact on listing activity in that market,” he said.

General Manager of the JSE, Marlene Street-Forrest, said that the five listings done within six weeks is evidence that there is no slowing effect.

“We have had the listings of five securities since the beginning of the year: the three preference shares by JMMB, and the listings of tTech and CAC on the Junior Market.

Air conditioning and energy solutions company CAC alongside managed IT services tTech were listed on the Junior Market of the JSE on Thursday January 7. tTech raised $50.2 million in one minute after opening its offer, while CAC raised a little over $133 million in two days, also overshooting its target and closing early.

On February 11, JMMB listed two of its preference share offers on the JSE’s US dollar market: cumulative redeemable 6.00 per cent and 5.75 per cent USD prefs. Simultaneously it listed two tranches of Jamaican dollar preference shares: cumulative redeemable 7.50 per cent and 7.25 per cent variable rate. The four tranches of shares raised approximately $6.9 billion.

Street-Forrest concluded,“I therefore do not think that the elections in and of itself is influencing listings as the number and amount raised are encouraging.”

The general manager said that even with regards to uncertainty surrounding policy changes related to the Junior Market, there is so far no evidence of an impact.

“We are just halfway through the quarter and I believe it does not give us enough time to develop a trend line,” she said.

An in-house analyst at the JSE, reviewing data for the last five years for the six-week period December 31 - February 14, also agreed that “the pending elections do not appear to have a negative impact on the activity in the market. In comparison, in 2016 the indices have increased for the six-week period compared to the end of 2015, and volume and value for all markets have also improved in comparison to the comparative periods”.

Since the start of the year, the Junior Market index rose 26.62 per cent when compared to 3.74 per cent for the similar period in 2015. A total of $316 million in value was traded in the first six weeks of this year, compared to a value of $42.48 million in 2015 for the same period.

For the six weeks during December 31, 2013 - February 14 2014, the main market index climbed 5.71 per cent with a total value of $2.95 billion traded during the period. Units traded were 239 million.

In the similar period in 2015, the index grew at a slower pace, 3.38 per cent, with $1.57 billion traded and 114.8 million units crossing the floor. Additionally for the comparative period in 2014, the index declined 1.26 per cent with $798.08 million in value traded and 132.06 million units changing hands. The 2013 and 2012 periods also exhibited slower activity than 2016, with an index decline of 7.06 per cent in 2013 and a fall of 3.09 per cent in 2012.

The JSE main index closed at 157,322 points yesterday, down 0.58 per cent. It was also significantly lower than its recent high of 165,011 points on February 4. Meanwhile, the JSE Junior market index also declined yesterday by 0.54 per cent to 2,240. It was down from its recent high of 2,357 points on January 12.

 

Source:
BY AVIA COLLINDER
collindera@jamaicaobserver.com
Business reporter 
Jamaica Observer
Friday February 19, 2016

http://www.jamaicaobserver.com/business/Election-having-little-impact-on-stock-market---stakeholders