MORE people are discovering the power of investing in stocks to grow their money faster and build wealth over time, and experts say now is the perfect time to start investing in stocks, or equities as they are sometimes called.

With interest rates declining and inflation showing signs of easing, investment advisors have been anticipating a rebound in the stock market.

“Currently, given that bond rates and interest rates overall are coming down, we’re starting to see a huge interest back into the stock market,” said senior wealth advisor at NCB Capital Markets, Rusharma Wynter during the Throp X Investment Conference 2024.

In a recent panel discussion titled ‘Beyond the Basics: Navigating Jamaican Financial Markets’, investment experts discussed how the impact of Bank of Jamaica’s (BOJ) decision to ease interest rates three times so far this year is fuelling the shift.

On August 20, 2024 BOJ reduced rates by 25 basis points to 6.75 per cent per annum, followed by another quarter percentage point cut to 6.50 per cent effective October 1, and yet another which took effect November 22, 2024 — bringing the policy rate to 6.25 per cent.

These rate reductions have signalled to the market to make a shift in investment strategies. As interest rates decline the attractiveness of fixed-income investments, such as bonds and certificates of deposit (CDs) — which previously offered returns as high as 13–15 per cent — has waned, prompting investors to pivot toward the equities market for better growth opportunities.

“When you’re going into the stock market you ought to be investing when it’s in a bearish state — and a bearish state means that it’s not rallying,” advised Denise Marshall-Miller, senior manager at VM Wealth Management.

While explaining the reason for the shift in investment strategies, Marshall-Miller emphasised the importance of timing market entry. She pointed out that many stocks are currently undervalued, suggesting that now is an ideal time to look for stocks trading below their intrinsic value.

“If there is a company that, based on the valuation, the stock should be trading at $10 [but] it’s actually trading at $8, that’s a buy. So at this point in time it’s actually a very important entry point to go into the equities market,” cited Marshall-Miller.

Not leaving first-time investors behind and acknowledging that many are still uncertain about where to invest, the advisors quickly highlighted performing companies on both the junior and main markets. Companies like Fesco and Regency Petroleum were noted for their solid performance in the energy sector, while GraceKennedy, Wisynco, and Spur Tree Spices were also mentioned as strong performers. Investment advisors also pointed out several blue chip stocks — well-established, financially stable companies with a history of reliable performance and consistent dividend payments. Among these were GraceKennedy Group, Wisynco and Seprod, which continue to expand and dominate their respective sectors while growing their market share.

“When you look across the main and the junior market there are a number of stocks that you can [include to] put a portfolio together that is able to give you a really good return in the medium to long term,” said Marshall-Miller.

A newcomer in the transportation sector, TransJamaican Highway was singled out as one of the best-performing stocks since its debut on Jamaica Stock Exchange. The company recently hit an all-time high of over $4 — a significant increase from its initial listing price of around $1.41 just before the COVID-19 pandemic.

“When you think about TransJamaican, they operate the toll, and where that revenue to come continues to increase and the additional leg of the different highways to come into effect, you just think about that additional revenue,” she hinted.

Recent changes to energy legislation could tip the scales in favour of stocks such as Wigton, according to investment expert Miller. She highlighted that with the Jamaican Government’s renewable energy agenda — which aims to achieve 500 megawatts by 2025 — Wigton stands a strong chance of becoming a major player in this sector.

“They came to market at $0.50. They peaked at almost $2. They’re trading just below, just a little higher than $1. But that is another one that is, I believe, a sleeping giant — and when it moves, it’s when it moves significantly,” Marshall-Miller continued to share.

Currently, Wigton has an established relationship with Jamaica Public Service (JPS), selling the energy it produces to the utility company. As a key entity in the renewable energy space, Wigton is well-positioned to benefit from the Government’s push for increased renewable energy production. The appeal of fixed-income investments in previous years stemmed largely from the ability to receive periodic payments — something equities didn’t offer outside of dividends — and returns depend on stock price appreciation. During the pandemic many institutions, particularly within the financial sector, halted dividend payments. However, as companies have returned to pre-COVID or even better positions they are now reinstating and increasing their dividend payouts.

“It’s dividend season,” said Wynter with a big smile. “We [NCB] recently would have paid out dividends and have been paying out dividends for, well, each quarter. TransJamaican Highway recently paid out dividends as well; they tend to be the crowd’s favourite for investors when it comes to dividends. They’re one of the top 10 paying dividend stocks in Jamaica,” she added.

Now that dividends have returned, investors can look forward to generating periodic returns as well. Some of the top dividend-paying stocks mentioned during the conference include VM Wealth Management, NCB, Wisynco, and TransJamaican Highway, though the list is not exhaustive. While unit trusts and mutual funds provide a way for individuals to participate in the stock market, some investment banks offer the opportunity to trade independently through online platforms or apps; these tools allow account holders to view their portfolios and manage their investments. Additionally, Jamaica Stock Exchange (JSE) has developed the JTrader platform, designed specifically for the Diaspora and which enables them to trade equities from anywhere in the world. However, trading still requires going through a broker to set up an account and execute transactions.

“Every broker, such as NCBCM, provides access to the JTrader platform, allowing you to execute trades from anywhere, whether you’re in the UK, the US, or elsewhere. But first, you need to set up an account with a broker to have this done,” Miller stated.

VM Group’s wealth management division and NCB Capital Markets offer stock market access through licensed financial advisors. To start, individuals need to provide identification, proof of income, source of wealth, and proof of address. For local residents, NCB Capital Markets offers an online process while international clients must verify documents in person. VM Group has representative offices in the UK, New York, and Florida, where clients can have documents witnessed. Alternatively, documents can be notarised and sent in for processing.