As the curtains draw to a close on 2011, it is being touted as a solid year for the Jamaican stock market with equities benefiting from a low interest rate environment, increased liquidity and improved company reports.

“2011 will be remembered as a good year for stocks, particularly on the Jamaica Stock Exchange (JSE) Junior Market and amongst blue chip main market companies,” noted Kimberly Thelwell, investment banking and research manager at Stocks and Securities Limited (SSL).

With the key JSE Market Index gaining 13 per cent year-to-date, it’s on track to record its highest growth rate since 2004. What’s more is that the Junior Market — comprising of small and medium sized companies with capital of $50 million to $500 million — rose by a whopping 102 per cent over the period.

“This (main market) performance is considered commendable when compared with the prior year’s 1.37 per cent gain over the comparable period,” Mayberry Investment Limited vice president, research and special projects, Tania Waldron told the Business Observer.

Waldron added, “The Junior Market enjoyed continued interest by both investors and entrepreneurs with four companies being admitted during the year.”

At the end of trading on Friday, 30 out of 38 stocks on the main market closed higher than the price at which they started the year, with financial services institution Jamaica Money Market Brokers leading the way with year-to-date capital appreciation of 212 per cent. National Commercial Bank (NCB) and Sagicor Life have also recorded strong returns, gaining 45 per cent and 38 per cent respectively over the period.

Seven out of eight stocks that began the year trading on the Junior Market closed at higher year-to-date prices on Friday, led by the Lasco Group of companies — Lasco Distributors (332 per cent), Lasco Manufacturing (138 per cent) and Lasco Financial (134 per cent).

SSL’s Thelwell noted that, with at least $100 billion of Bank of Jamaica Certificate of Deposit maturities entering the market each month, many investors have been looking to put money into the stock market, which has been presenting a good value proposition against the background of unattractive rates on fixed income, “improved quarterly results by several companies and confidence-boosting corporate moves”, she added.

The views expressed by analysts on equities are much more favourable than they were some six months ago, when lack of liquidity and less-than-stellar company earnings were being blamed for what was then the widely perceived underperformance of the local stock market since the advent of the Jamaica Debt Exchange (JDX). The February 24, 2010 JDX chopped significantly the average yield on Government of Jamaica (GOJ) Jamaican-dollar denominated bonds and was expected to increase the appetite for equities.

Analysts subsequently hold a postive outlook for equities going forward into 2012, with the expectation that the local economy will continue its rebound out of the recession.

“SSL expects another positive year for stocks. We anticipate the Junior Market to continue to experience growth as small and medium companies access capital in a structured and regulated environment,” said Thelwell, touting that “In particular, opportunities such as SSL’s imminent initial public offering for intellectual property start-up company C2W Music Limited reflect one of the main reasons that the Junior Market was established.”

Thelwell added that on the main market, SSL recommends fundamentally sound companies such as GraceKennedy, NCB, Desnoes & Geddes as well as Carreras for the dividend yield.

Waldron also advised investors to explore equities with high dividend payout history, adding that persons should “remain liquid and flexible” and invest in equities with strong performance history.