More juice in the stock market

Business

More juice in the stock market

…analysts say market to benefit from $89 billion in maturing JDX bonds

Wednesday, January 22, 2020

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The local stock market is expected to remain bullish for 2020, particularly given the $89 billion in bonds that will be maturing by October this year.

That's the word from Jamaica Money Market Brokers (JMMB) investment experts Peter Thompson and Greig Lindo, who say “there remains some juice in the stock market”. This is particularly so because of the low interest rate cycle that Jamaica is going through.

Speaking on the weekend at the JMMB financial empowerment event series dubbed JMMB Elevate 2.0, Lindo made out a case that most of the $89 billion worth of government bonds maturing in October this year should be found in the stock market given the low interest rates on the bonds and in money market. He explained that the maturing bonds were invested in the Jamaica Debt Exchange Programme.

STOCK MARKET BOOM TO CONTINUE

According to Lindo, there is even more interest being shown among local investors in the stock market, particularly given the companies that will be coming to the market, citing the impending initial public offer (IPO) of shares in TransJamaica Highway, which is expected to be the biggest IPO in Jamaica.

The JMMB investment expert highlighted the fact that the main market of the stock exchange has been where most growth has been coming from, pointing to the potential for even more significant growth in the junior market.

The stock exchange grew by 33% over the last four years, of which the junior market contributed 18% over the period with the potential for even greater growth this year.

“The stock market has been growing particularly over the last four years, peaking in August 2019, but the main index has been down since then. Looking forward, growth is going to be difficult but the equities market has some juice to achieve growth in 2020,” Lindo reasoned.

For his part, Thompson argued that “during 2020 the phenomenal growth experienced over the last four years will be normalised”. He cautioned about investing in the equities market without proper due diligence and research. Thompson made the point that it will be even more challenging to make money on the equities market this year.

NOT ALL IPOs WILL MAKE YOU MONEY

“Many companies going the way of IPO but not all IPOs are equal,” informed Thompson, explaining that not all IPOs will make investors money. “In 2020 you can lose money in the equities market, so in order to make money you have to do the research,” Thompson cautioned.

He pointed to the many opportunities in the various classes of assets such as bonds, equities, money market, but worldwide equities are where the most money is made from these days because of falling interest rates internationally. Thompson explained that some jurisdictions are now offering negative interest rates on investments.

JMMB ELEVATE 2.0

JMMB Elevate 2.0 is a part of JMMB's goal-getter series, held from January 17-18. The two-day event kicked-started with an after-work session, 'Learn & Vibe' on January 17, during which the speakers delved into wealth creation opportunities and spoke to major financial trends that impacted 2019, in anticipation of what's likely ahead in 2020.

The overarching aim of the event is to encourage and empower individuals to be more intentional about their financial goal achievement; take actionable steps — like opening an account or starting their financial planning conversation on the spot, if they desire — as a first step towards achieving their dreams; and create a plan that will guide them to attain their goals.


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