'Jamaican stock exchange rallies to become world's best performing' — says

Observer writer

Friday, October 11, 2019

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The Financial Times has given recognition to Jamaica's stock market success story in a piece entitled 'Jamaican stock exchange rallies to become world's best performing'.

The article examined the stock exchange's number one rating among “94 bourses tracked by Bloomberg over the past 12 months” against the backdrop of the island's dramatic economic u-turn in recent years.

The past year saw the $1.5 trillion (US$11 billion) stock exchange advance by 35 per cent and the article noted that “total gains over the past five years come to more than 600 per cent — again, the world's best performance”.

The Financial Times, viewed as the UK's top financial publication, explained that Jamaica successfully completed its International Monetary Fund (IMF) programme ahead of schedule and received accolades from the international lending agency for its economic recovery.

This rehabilitation has seen the island bounce back from government debt which six years ago was at 147 per cent of gross domestic product with “a third of the country's fiscal budget” going to service that debt.

But the article noted that only last month Jamaica “sold US$815 million of bonds at a yield of just 5.8 per cent, which was followed by a credit rating upgrade by Standard & Poor's (S&P)” and that the success of the stock exchange comes after years of uncompromising faithfulness to the measures required by the IMF as well as maintaining “one of the world's biggest budget surpluses.''

A debt to GDP ratio of under 100 per cent and an overall increase in confidence which has helped to bring unemployment down to the lowest it has ever been, are also results of the country's financial policies of recent times which helped to fuel the stock exchange's surge.

“Jamaica has made material progress in achieving macroeconomic stability and strengthening of its external position, improving its ability to withstand external shocks,” the Financial Times quoted Standard & Poor's as saying.

The article did not give a wholly one-sided assessment of Jamaica's economic recovery, however, pointing out that on the negative side — despite record low unemployment — economic growth was taking place at a “sedate pace” of around 1.9 per cent.

This situation, it said, was exacerbated by the “planned closure of a big bauxite mine for upgrades” and the constant threat of tropical storms.

The overall outlook is still promising however as “both the IMF and S&P forecast that growth will accelerate in coming years thanks to the improving macroeconomic foundations, such as declining government debt, healthier reserves, low inflation, a flexible exchange rate and moves to make the central bank fully independent.”

The article referenced insights from Jamaican financial analyst, John Jackson, and emerging markets fund manager at M & G Investments, Claudia Calich.

According to the article, Jackson claimed that investors have entered the equity market due to “declining yields on fixed-income assets” while Calich was motivated by Kingston's stringent financial policies of the past few years, which the Financial Times said spurred her to “overweight Jamaica in her portfolio”.

“In the past they have shown an extremely high willingness to pay, but very limited ability,” the emerging markets fund manager was quoted as saying at the end of the piece.

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