Jamaica has entered new phase of investing maturity — Golding

Cautions on Bitcoin excitement


Wednesday, February 14, 2018

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In 2017, the demand by new investors to participate in the various initial public offerings (IPO) was significant.

So intense was the demand that anecdotal reports said that one broker in New Kingston had to put out chairs in the parking lot to accommodate the investors that came to buy stock in its investment arm.

At least 12,000 new accounts were opened on the Jamaica Central Securities Depository (JCSD) and pushed investor interest and demand for brokers to bring new issues to market in 2018.

And as investor interest heats up, is this a case of herd mentality or have Jamaican investors become more mature and discerning in where they put their money? We asked veteran investor Mark Golding, director of PROVEN Investments and opposition spokesman on finance, to share his views on where the market has moved from his first listing in 1992 of Dehring, Bunting & Golding (DB&G).

Golding is of the view that it's not about the herd mentality, but the improved fundamentals of the local economy.

“So, what we've seen in Jamaica is this: As Jamaica turned the corner on managing its public debt and started to pursue a more sustainable financial path, and really implement the reforms that are needed to achieve economic success, the stock market reacted to that. So I think in 2015 the Jamaica stock exchange was the top-performing stock market in the world. That trend has continued, and of course that means that investors have been making high returns at a time when interest rates have been coming down, because part of the benefits of proper economic management of the economy was the reduction in interest rates. So, in terms of investment opportunities, the stock market has presented an excellent one for investors. So it's not surprising to see the popularity of the current offerings that are being brought to the market.”

Where Golding thinks that investors on the Jamaica Stock Exchange (JSE) have entered into a new phase of maturity, new types of investing may need a more cautious approach.

Golding explains, “I think we are more mature, and there may be some elements of following the herd. We are more mature in the sense that I think that the capital market and the participants and players in the market are much more technically knowledgeable than they were 20 to 30 years ago. There are more of them; they have been through and experienced what Jamaica has gone through over the last two decades, and are aware, I think, of the proper pricing of assets, the role of liquidity and all those things.”

Golding also has high regard for the media: “And the media too, I think, are better prepared for properly analysing what's going on, identifying risk and so on, so that the readers and listeners and viewers have the benefit of that. So I do think that we are in a more mature place; but having said that, we do have that, and I think this is limited to Jamaica, but there are propensities for people to kind of adopt the flavour of the week and run with it.''

Golding has a word of caution, however, concerning the current excitement over Bitcoin. “I mean, we're seeing it in cryptocurrencies. You know that last year Bitcoin and so on ran up many thousands of per cent in terms of increases, but that has suffered a setback recently.”

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