Local stock market rose 1 per cent in 2Q

Saturday, November 07, 2009 11:35 PM

Business

By Steven Jackson, Observer writer editorial@jamaicaobserver.com

Wednesday, July 01, 2009

The Jamaica Stock Exchange (JSE) has risen 1.2 per cent over the second quarter ended June 30, 2009, as it tries to recover from its worst decline in 14 years.

The worst declining stocks year-on-year were Hardware & Lumber, down 66 per cent, Kingston Wharves down 60 per cent, Jamaica Producers down 55.8 per cent, Carib Cement down 53 per cent, Gleaner down 51 per cent and Berger Paints down 50 per cent. The data was compiled by the JSE which published its quarterly statistics yesterday.

Only three out of 36 stocks are trading at 52-week highs Sagicor, Montego Freeport and Ciboney Group, whilst the index at 80,866.1 points was down 26.3 per cent in value year-on-year. Three months ago, the index was at 79,850 points but now has gained some 1,000 points.

The worst decliners are manufactuers and conglomerates. But interestingly, the decline in stock performance did not reflect an overall decline in profitability for the big companies. For instance, manufacturers and conglomerates (which includes 11 companies) saw $3.02 billion in quarterly profits for the March quarter up 90 per cent over last year's quarter.

The biggest profits jumps year on year came from Lascelles at $945 million but its stock price remained down 32 per cent year on year; GraceKennedy at $933.9 million but its stock was down 46 per cent; Jamaica Broilers at $461 million but its stock was down 43 per cent year on year and Seprod at $455.9 million but its stock was down 7.3 per cent year on year.

The last time the market declined this much was in May 1996 at 12,936 points, down 29 per cent year on year.
But it is still better than in 1993 when the market lost 65 per cent of its value. It dipped from 32,421 points in January to 11,221 points by January 1994, losing over 90 per cent of its market capitalisation from J$1.45 billion to J$129.8 million according to Bank of Jamaica data.

The JSE expects that the market will recover in 2010. Last quarter, head of the JSE Marlene Street-Forrest had blamed the ongoing decline in market performance on the global meltdown, high interest rates and its crippling spillover effect on company earnings in 2008.

The economic downturn is ironically driving companies to list on the junior exchange launched last month as it offers not only cheap capital but a ten-year tax break.

Street-Forrest said that the junior stock market will get its first listing in July having been delayed from May. There are 35 companies jostling to join the junior stock exchange which allows companies to raise between J$50 million and J$500 million.

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