Feature
Prime Minister, the Most Hon. Andrew Holness, converses with Jamaica Stock Exchange (JSE) Managing Director, Marlene Street Forrest, during for the JSE’s 14th Regional Investments and Capital Markets Conference at the Jamaica Pegasus Hotel in New Kingston in January.
Photo: Yhomo Hutchinson

Story Highlights

  • The Jamaica Stock Exchange’s (JSE) globe-topping performance and success in 2018 is, to a great extent, being attributed to ongoing strengthening and consolidation of the country’s macroeconomic environment.
  • Bloomberg Businessweek, in a January 18 article titled: ‘Welcome to Jamaica, Home of the World’s Best Performing Stock Market’, notes that the value of JSE’s main index [in U.S. Dollars] rose by 29 per cent in 2018, which enabled it to top the global capital market by year-end.
  • This outturn, the article points out, is the most among 94 national benchmarks tracked by Bloomberg.

The Jamaica Stock Exchange’s (JSE) globe-topping performance and success in 2018 is, to a great extent, being attributed to ongoing strengthening and consolidation of the country’s macroeconomic environment.

Bloomberg Businessweek, in a January 18 article titled: ‘Welcome to Jamaica, Home of the World’s Best Performing Stock Market’, notes that the value of JSE’s main index [in U.S. Dollars] rose by 29 per cent in 2018, which enabled it to top the global capital market by year-end.

This outturn, the article points out, is the most among 94 national benchmarks tracked by Bloomberg.

The article further indicates that the JSE’s “outperformance” over the past five years is “even more striking”.

“Jamaican stocks have surged almost 300 per cent, more than quadrupling the next best performing national benchmark and sextupling the S&P 500’s advance,” Bloomberg Businessweek adds.

The S&P 500 is an American stock market index, based on market capitalization of 500 large companies having common stocks listed on the New York Stock Exchange, NASDAQ Composite or Cboe BZX Exchange.

Prime Minister, the Most Hon. Andrew Holness, says the JSE’s outstanding performance “reflects the buoyancy and growing confidence in the Jamaican economy”.

Prime Minister, the Most Hon. Andrew Holness (right), is escorted inside the Jamaica Pegasus hotel in New Kingston by Jamaica Stock Exchange (JSE) Managing Director, Marlene Street Forrest (left), for the opening ceremony for the JSE’s 14th Regional Investments and Capital Markets Conference, in January. Others (from second left) are Mayberry Investments Limited Chief Executive Officer, Gary Peart; and JSE Chairman, Ian McNaughton.

 

“The JSE continues to send the signal that our investment community has the appetite… but, more importantly, it has the cash to invest,” he adds.

Jamaica Chamber of Commerce (JCC) President, Lloyd Distant Jr., who concurs, describes the announcement as “absolutely positive news”, and cites the Economic Reform Programme’s (ERP) positive outturns as the primary contributor.

Jamaica Chamber of Commerce President, Lloyd Distant Jr.

 

“The nation made the sacrifices and we are now beginning to see some of the positive outcomes of that reform effort… over the past couple of years,” he tells JIS News.

These, Mr. Distant notes, include: ongoing expansion in mortgage disbursements, and credit to the business sector, particularly small and medium entrepreneurs “albeit [slower] than we would like… but we do see it extending”.

The JCC President adds that these and other key outturns “augur very well for Jamaica’s economic future”.

Mr. Distant Jr cites several imperatives and stakeholders, key to maintaining/sustaining and enhancing the momentum of the JSE’s boom.

Most importantly, he outlines, is further macroeconomic strengthening, noting that the success of the economic reform initiatives “has created a level of stability in the minds of investors and the business community alike”.

“Once you continue to further reduce the debt level, [exercise] fiscal prudence and attain the high levels of [growth] we seek, I think we will continue to see this momentum,” he adds.

Mr. Distant says ongoing institutional capacity building by the JSE, particularly modernization, is also key.

“I see a lot of that taking place and they need to continue doing that with the urgency that is required of a growing market,” he adds.

Mr. Distant says the momentum also presents an opportunity for stock brokers to partner with the JSE in order to encourage more Jamaicans to invest in equities for the long-term, which he emphasizes is “very important”.

The JCC President also underscores the need for the private sector to treat the stock market as “another viable avenue to raise capital”.

“It’s not all about borrowing money or selling shares in a particular way. The JSE has truly become a viable avenue for raising capital, and you can see this in the success of the over 100 companies listed,’ he adds.

Mr. Distant also lauds successive Administrations’ undertaking to maintaining predecessors’ policies and programmes that have borne and continue to yield tangible outcomes.

“Often, governments [would in the past] come in and change policies… more for political reasons. So credit must be given to the previous administration for getting us started and the new Government that came in and continued what was started, thereby getting us to where we are now. It’s very important to note that,” he states.

Mr. Distant says the JCC is “very proud” of the JSE’s accomplishments which he argues is indicative of “the continued growth and development of our financial sector which is, by extension, fundamental to the growth and resilience of our economy” adding that “I believe all Jamaicans should be proud”.

Jamaica Employers Federation (JEF) President, David Wan says the JSE performance and the global prominence afforded by Bloomberg “is very good for Jamaica”.

He also cites successive Administrations’ commitment to maintaining policies agreed on with the International Monetary Fund (IMF) since 2013 in order to, among other things, reduce Jamaica’s debt, as a pivotal factor.

Mr. Wan says ingoing debt reduction has freed up resources that are now available for borrowing by the private sector, while compressing interest rates which he contends “is great for any economy”.

He further points out that the resulting low interest rates “is part of what is fuelling the stock market”.

The JEF President posits that investors, whether individuals or entities/organizations, such as pensions or insurance companies, having money to invest “typically look at stocks, real estate or bonds”, while highlighting instruments issued by successive administrations, in the case of the latter.

“Now that the supply of bonds [has] decreased significantly because the Government is paying off the debt, they [investors] are now looking at [other] options, which [include] real estate and stocks. So that has been another [reason for] this buoyancy in the stock market,” he adds.

Mr. Wan believes this scenario augurs well for the future of the stock market and, by extension, the economy, and declares that “I would say absolutely 100 per cent”.

Former JCC President, Warren McDonald, who also describes the announcement as positive news, attributes the JSE’s strong outturns to the Government’s prudence in implementing the requisite fiscal measures resulting in ongoing strengthening of the economy.

He also cites the Administration’s timely redemption of government bonds which yielded surplus returns to holders who were and still are able to invest in stocks, among other instruments, as another reason.

“If you look at the confidence indices… both businesses and consumers feel the time is right to invest. So the confidence is there [and] the money [is also] there… and I think the stock exchange was [and remains a] beneficiary,” Mr. McDonald tells JIS News.

Executive Director of the Caribbean Policy Research Institute (CAPRI), Dr. Damien King, says the JSE’s performance reflects shareholders’ optimism in sound economic policies implemented by successive Administrations.

“As soon as our governments started to make constructive policy moves – balancing the budget, contracting the public debt, managing inflation better, making it easier to start a business [and] improving infrastructure -, all of those implied, as a consequence, that doing business [or investing] in Jamaica was going to become more profitable,” he tells JIS News.

Dr. King anticipates that efforts to maintain and improve these conditions, will continue.

“Sound economic policy implementation and reform are not static. They are not things you do and sit back and wait for the economy to grow. As the economy expands [it] comes upon new bottlenecks and new constraints. So the process of economic reform and improvement has to be continuous,” he emphasizes.

Jamaica Manufacturers and Exporters Association (JMEA) President, Metry Seaga, also concurs that ongoing implementation of sound macroeconomic policies has augured for the local capital market, and economy.

Jamaica Manufacturers and Exporters Association President, Metry Seaga.

 

He, too, cites the continuity of tangible policies and programmes that have yielded or can potentially generate positive outcomes, as key.

“We are a very strong and stable country, and that bodes well for our stock market. I hope that more people choose to invest in it and that more companies choose to list on it and raise capital that way,” Mr. Seaga tells JIS News.

He anticipates that once this happens, the Jamaica Stock Exchange “should grow from strength to strength”.

This year marks the 50th anniversary of the JSE’s founding. Among those pivotal in this undertaking is former Prime Minister, the Mot Hon. Edward Seaga, who was Finance Minister when the JSE was launched in 1969.

The JSE’s Managing Director, Marlene Street Forrest, says the entity, like others across the Caribbean, is part of an evolving global market which, she notes, “is rapidly changing to such as extent that we hardly recognize it”.

Mrs. Street Forrest emphasizes, however, that “it is imperative that we embrace it if we are to achieve real economic growth and prosperity”.

“We know that, as a region, we are small, given our combined populations, compared to the larger more developed countries. But the size of a population should not matter where equality can be driven by technology which has… altered what was considered normal… where capital flows to markets considered to be developed. But now, with technology, normal can mean capital flows to our market,” she adds.