Lasco, CPJ makes JSE Select
Four Junior Market companies makes top 15 most liquid stocks traded on the Jamaica Stock Exchange.
For the first time in the history of the Jamaica Stock Exchange (JSE), Junior Market stocks will populate the JSE Select Index -- the index that carries the 15 most liquid publicly traded stocks in Jamaica.
Why should anybody be excited about this?
Think of the JSE Select as 15 of the most talked about kids in high school or the 15 top trending people on Twitter. Junior Market stocks are the 'small fries' of the local stock market when judged by size and market capitalisation, so for these companies to overtake larger, more established companies in liquidity is a big deal.
Caribbean Producers Jamaica Limited (CPJ), Lasco Distributors Limited (LASD), Lasco Financial Services Limited (LASF) and Lasco Manufacturing Limited (LASM) have all been ranked in the fifteen most liquid stocks based on the volume of shares, value of transactions and number of shares traded on the most trading days in 2013.
Liquidity refers to the ease at which an investor can sell or buy the selected securities. Investors should feel confident that when they choose to buy or sell securities there is counterparty on the other side of the trading platform.
For 2013, CPJ had 34.8 million shares traded with a total value of the transactions at $74.5 million. LASD, LASM and LASF had total shares traded during the year at 51.1 million, 45.5 million and 52.8 million respectively, with total value of the transactions during 2013 at $245.8 million, $286 million and $124 million respectively.
Noticeably, three of these junior market stocks carry the moniker of 'Lasco'. In July 2013, LASD, LASM and LASF each had stock splits that increased the volume of shares in circulation for the Lasco Affiliated Companies. On June 26, 2013, the companies each kept an extraordinary general meeting and each passed a resolution for a 10:1 stock split. The split increased the number of shares and lowered the price of the stock but held the market capitalisation (the total value of the company) the same. The record date for the split was July 9, 2013, and the date on which the split took effect was July 5, 2013. The announcement of the stock split led to a sharp increase in the value of the Lasco Affiliated Companies: LASD moved from $11.32 per share as at May 21, 2013, to $16.34 per share as at July 4, 2013. The sharp increase in value and volume in 2013 can be credited for carrying these three stocks into the JSE Select.
While growth prospects are not a requirement for making it into the Select Index, it would not hurt to talk about the actual prospects and potential for further growth for these relatively young companies. LASM and LASD are looking to build capacity and grow their product base as the former is building a factory in White Marl, St Catherine, and LASD is expected to distribute those goods. LASF has expanded its operations in Barbados with a partnership with Unicomer Barbados, known to most Jamaicans as Courts.
CPJ, in its growth efforts, has started exporting goods to other Caribbean countries and the expectation is that these exports will continue. Future development could spawn even more liquidity, as investors look for opportunities that can provide the required rate of growth.
Richard Deane is the assistant manager, research & special projects at Mayberry Investments Limited.