While long-term investing has always been encouraged, experts warn that Jamaica’s strong buy-and-hold culture is now slowing trading in the secondary market, limiting liquidity and discouraging broader investor participation.

The issue was raised during discussions at the 21st Jamaica Stock Exchange Investments and Capital Markets Conference.

“Jamaica’s capital market is characterised by large institutional investors, pension funds, collective investment schemes and issuers, and what we have observed is a strong buy-and-hold strategy,” said Sarah Cummings, director of corporate solutions and investment banking at Scotia Investments Jamaica. “As you can appreciate, having a buy-and-hold culture suppresses secondary trading.”

The secondary market refers to the buying and selling of shares and bonds after they are first issued. Active trading in this market is critical for liquidity, as it allows investors to enter and exit positions more easily and helps determine fair pricing.

When trading activity is low, investors become hesitant to participate, and companies face greater difficulty raising capital.

While discussions focused on the use of “creative instruments” to enhance market liquidity, Proven Wealth President and Chief Executive Officer (CEO) Luwanna Williams suggested that the solution may not lie in introducing entirely new products.

Instead, she argued that existing investment offerings should be structured to encourage broader participation and more frequent trading. This includes reducing minimum subscription and trading amounts to make securities more accessible to retail investors, as well as offering multiple tranches to widen inclusion and stimulate secondary market activity.

Similar concerns were raised by NCB Capital Markets Senior Vice-President, Investment Banking, Christopher Buchanan, who said the buy-and-hold mentality extends beyond Jamaica and is evident across the region.

He noted that conversations with investment managers point to a reluctance to sell long-held securities and reinvest elsewhere, often driven by the belief that there are limited attractive alternatives available.

Buchanan said this reflects a broader supply issue, raising questions about whether there are enough investable assets across Caribbean markets to give portfolio managers the confidence to reposition their portfolios.

But Williams noted that this hesitancy extends beyond institutional investors to retail participants and is closely tied to gaps in investor education.

“People buy what they understand,” she said.

Williams questioned whether investors fully understand the role brokers and investment professionals play within the industry.

Broader inclusion, Williams noted, requires a clearer understanding of what investors want, particularly as many tend to gravitate towards familiar, straightforward businesses when making investment decisions. As a result, industry stakeholders have a responsibility to clearly explain investment options through multiple channels.

“To our clients, are we breaking down the investment opportunities that are available to them based on their risk profile?” Williams asked.

That education gap, she said, is particularly evident when it comes to newer instruments such as green and blue bonds. While these products have the potential to attract capital and support sustainable development, Williams cautioned that without a proper understanding, investor participation will remain limited.

She noted that the Jamaica Stock Exchange has introduced guidelines for green bonds and expanded eligibility for smaller issuers, adding that Hurricane Melissa has heightened awareness of the need for climate-focused investing.

Pointing to Europe as a more mature market for sustainable finance, Williams cited the example of a German-based company seeking to invest in renewable energy projects across the Caribbean.

Despite multiple attempts across the region, the company raised just US$11 million of a US$20-million target. It later turned to the Oslo Stock Exchange in Norway, where it raised approximately US$100 million and subsequently stopped seeking capital in the Caribbean.

“This was a very attractive investment in terms of yield. It was steady in terms of cash flows, and the issuer was also well known internationally,” Williams said. “So what was the problem?”

She attributed the outcome to limited understanding and lingering misconceptions around sustainable investments, noting a perception among some investors that green investments are less profitable or difficult to understand.

“If more pension funds, through their investment policy statements, required that a portion of their portfolios be allocated to ESG (environmental, social and governance) investments, that would encourage asset managers to participate,” Williams said.

She argued that the fundamentals supporting green and climate-focused investments are already sound, suggesting that pension funds should not need to be compelled to participate, particularly in the wake of a Category 5 hurricane that has underscored the region’s exposure to climate shocks.

Instead, she said greater emphasis must be placed on improving understanding and confidence so investors can take advantage of existing opportunities. That education gap also extends to regional capital markets, where deeper regional integration could play a critical role in expanding investor inclusion and improving liquidity.

“Why aren’t more companies looking at different markets for themselves?” asked Buchanan.

Buchanan said cross-listings would allow companies to build brand recognition, access a wider investor base and improve their ability to raise capital.

However, conservatism continues to limit activity, with some companies in the region hesitant to enter the Jamaican market, while Jamaican firms operating across the Caribbean have been slow to list on other exchanges.

He attributed this in part to limited understanding of listing requirements and the lack of harmonised rules across Caribbean stock exchanges, calling for greater collaboration to simplify cross-listing processes and encourage participation.

While discussions among exchanges have begun to gain traction, he noted that progress has so far been uneven, despite some companies listing subsidiaries.

“The Jamaica stock market is a little bit more developed,” said Williams. “When you speak to someone in Barbados, the average person is afraid of equities because they don’t understand it, and they can put their money in the bank and get a surer return.”