After its bumpy ride last year, analysts expect Jamaica's stock market to rebound at least during the first half of 2006, and hope that they are already seeing signs of better days ahead. Faced with high oil prices and bruising hurricanes that helped to fuel a sluggish economy, the Kingston exchange went south for most of the year. The bears were in the ascendancy.

Indeed, the markets to key indices, the JSE Market Index and the JSE All Jamaican Composite, declined last year by 7.3 per cent 9.8 per cent, respectively.
But things may be looking up.

On the year's last trading day on Friday, the JSE Market Index rallied by a robust 424.44 points, to close at 104,510.39 , while the All Jamaican Composite gained 308.88 points to close at 104,941.59.

Significantly, too, despite the buffeting the market took, particularly in the second half, 14 companies closed 2005 higher or at least the same price at which they started the year - two of which - Seprod, the commodity manufacturers and distributors, and the brewers, D&G - gaining 28 per cent and 27.5 per cent, respectively.

No one is yet predicting a running of the bulls, but analysts are decidedly more optimistic than they were not too long ago.
"All in all, we think that things will be better right now," said Shane Ingram, an analyst at the merchant bankers Dehring, Bunting and Golding (DB&G). "The PIOJ (Planning Institute of Jamaica) expects 2.9 per cent in GDP growth for October to December. If that actually happens, we can expect investors to participate more in stocks."

But he stressed: "What will happen in the stock market will depend heavily on what happens in the economy on a whole."

Much of what happens to the Jamaican economy, the experts say, will depend on what happens to oil. In that regard, the prognosis is not bad.
After last year's galloping oil prices, which helped to drive Jamaica's double digit inflation, the petroleum markets have stabilised and prices have even receded.

"The external shocks that we are exposed to as a small island is our import dependency and the major item being, of course, oil," said Christopher Williams, managing director of the brokerage house NCB Capital Markets.

"We continuously have to monitor it and predict the direction of oil prices. Certainly for the first part in 2006 it looks as if it will remain stable, or in fact go south," Williams said. "That's good for the market because it is good for investor confidence."

He, however, warned that there are internal factors that could make investors cautious and therefore limit any robust recovery of the market.
Not least of these concerns is crime. There have been more than 1,600 murders in Jamaica this year and the island rivals South Africa and Colombia for the world's highest per capita murder rate.
"Crime is our nemesis and we can't seem to find a solution, so that's an exposure," said Williams.

Investors, he added, will also want to know who will succeed Prime Minister P J Patterson as leader of the People's National Party (PNP) and head of government.

The contenders include the current finance minister, Dr Omar Davies, who seems to have strong support in the private sector; the security minister, Dr Peter Phillips; and the front-runner, the populist local government minister, Portia Simpson Miller.
"The fact that we are going to have a new prime minister... will affect investor confidence," Williams said, causing some investors to at least assume a posture of 'wait and see'.

Glenford Mcleish, who heads the stockbroking arm of Jamaica Money Market Brokers limited (JMMB), believes that prospects of new listings this year could help to give fillip to the market.

The GraceKennedy financial sector subsidiary, First Global, which shelved its planned listing last year, could, for instance, be on board this year. Several other firms have also signalled an interest in IPOs.
But McLeish warned that after the less than stellar performance of some recent listings, investors will be far from ready to throw their money at firms.

"After this year, investors will be both more clinical and therefore more cynical and they will fully scrutinise numbers that much faster," he said.
He nonetheless added: "Listing the public firms brings broader participation and gives the market some amount of growth and depth."

Importantly for investors, analysts expect a rebound in the market to be limited to any particular category of stocks, although manufacturing, because of the pummelling it took over the past year, has opportunity for substantial gains.

Said DB&G's Ingram: "I don't see any significant advance in any particular sector except for the manufacturing sector, which was adversely affected by weather conditions last year. So its obvious that earnings will be better for 2006."

Added NCB Capital's Williams: "The manufacturing sector -I like. It seems as if it will return to strong performance, especially when you look at the D&Gs and the Seprods of the world. They have solid business models and are making the necessary adjustments."

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