Mayberry Investments Ltd’s (MIL) CEO Gary Peart is enthusiastic about what he describes as the current “purple patch” being enjoyed by local investors.

“What we have seen historically is that, when you have a stable foreign exchange rate, people tend to invest more. That’s what we are starting to see,” Peart told the February 22 Monthly Investor Forum hosted by Mayberry Investments at the Knutsford Court Hotel, New Kingston.

According to him, there was a time the sector didn’t think that interest rates would ever fall below 20 per cent, much less to dip below the double digit figures experienced last year.

“For the entire 2016, we actually had interest rates below 10 per cent,” he recalled.

He said that while interest rates fell from seven to six per cent, it actually ended up at about 6.5 per cent, as towards the end of the year the Bank of Jamaica tried to defend the exchange. Things became “a little tighter” and ultimately the rates went up, but it still remained relatively low and has remained comparatively stable since.

“We believe the base has been set for sustained growth of about two per cent, and that if we get to sustain it at two per cent for two three years, we believe the stock market will show additional growth,” he argued.

“If you have not had money invested in the market for the last two and a half years, boy, you’ve missed out a lot,” he suggested.

So Peart chose what he described as the top buyers for 2017, as follows:

Berger Paints – growing demand due to growth in the economy, and increased construction;

Carib Cement — gains will increase in current mode;

Caribbean Flavours and Fragrances – “ a nice, quaint company, which can hold on to its customers”;

Carreras — a naturally good dividend, which has shown growth in its earnings despite being a regular tax target. It rebounds each time it is hit by new taxes;

Dolphin Cove — has been taken over by Mexican investors, which will allow it to increase charges and prices and place it in a good position this year;

National Commercial Bank (NCB) — which has increased earnings over 50 per cent, although it has not yet recognised its full potential in terms of where it is headed;

Bank of Nova Scotia (BNS) — which is expected to replicate NCB’s success;

Supreme Ventures Ltd — a consistent dividend payer for the last couple of years, paying one of the highest dividends in the market, sometimes even better than Carreras.

And his two “asterisks” — Pan Jam and Cable & Wireless.

Peart believes that Pan Jam — now an investment firm with more than 25 per cent of its earnings coming from investments in other entities — should be considered in the context of its earning potential, rather than its net assets value. However, either way, he said, Pan Jam is a very sound company.

He noted that there is a fierce battle going between Liberty Global, which acquired C&W, and the Financial Services Commission (FSC), where it seems the FSC is insisting that they make a takeover offer for the minority shares.

“The reality is that we do not know what the outcome is going to be, but if the FSC wins that argument, then you should have some C&W shares,” Peart insisted.

He noted that despite the Local Government Elections in November, the government was able to maintain the three-year-old Extended Fund Facility (EFF) agreement with the IMF, and has now gone a step further to actually move to a pre-cautionary Stand-by (SBA), which is considered more favourable.

“So we have moved from a situation where every three months you’re waiting to hear whether we are going to pass the IMF test to where we are now: We don’t even know when the next test will be,” Peart pointed out.

“Interest rates are low and we are seeing continued growth in the economy,” he stated.

He also noted that the junior stock market has been doing “exceptionally well”, and is close to the highs of 2004.

“People now believe that they should have invested more…It’s a great year, and as I said to someone it is a purple patch. You will be sad you missed it,” he commented.

However, Peart warns that investors should take into consideration possible risks or “subject to” which includes: the anticipated gap closing tax package for the 2017/18 budget; natural disasters; and the fact that the country is “still at the edge of the precicipe” and needs to bring down its debt-to-GDP from the current 120 per cent to about 60-70 per cent.

“The IMF agreement is important and we have to continue along that path, because I don’t think we can take our foot off the accelerator until we bring the debt to GDP down to 60-70 per cent,” he insisted.

Other commentators at the event included Rez Burchenson, managing director of Prime Asset Management Ltd at the Mayberry, and Keith Collister, financial analyst.