Trading in the foreign exchange on Wednesday was heavier than the large volumes going through the market on Monday and Tuesday as dealers continue to sell off excess US dollars.
The market closed with inflows of all currencies, ending at US$66.33 million, versus US$56.40 million on Tuesday. Dealers sold US$60.51 million in contrast to US$61.03 million, previously.
The buying and selling rates continue to fall in US dollar trading. The rate to buy the US dollar fell against the Jamaican dollar by 25 cents while the buying rate by dealer was down by 6 cents.
In US dollar trading, dealers sold US$56.68 million at a rate of J$126.08 at the close, compared to US$50.24 million at a rate of J$126.33 on Tuesday. Purchases of the US currency by dealers, amounted to US$61.86 million at an average of $125.19, compared to US$43.96 million at an average of $125.25 on Tuesday.
At mid-day on Wednesday, dealers purchased US$18.4 million at an average rate of J$125.63 and sold US$16.6 million at an average of J$125.96. At mid-day on Tuesday dealers purchased US$14.77 million at an average rate of J$125.53 and sold US$15.72 million at an average of J$126.18.
The selling rate on Wednesday, for the Canadian dollar slipped to J$98.20 from J$99.02 at the close on Tuesday, the selling rate for the British Pound increased to J$177.21 from J$178.38 previously and the euro fell against the Jamaican dollar to J$156.64 to buy the European common currency, versus the prior selling rate of J$156.73.
Modest trading on TTSE on Wednesday
There was no change in the number of securities trading Wednesday, compared to Tuesday, as 14 securities changed hands on the Trinidad & Tobago Stock Exchange.
Market activity ended with just 2 rising, 4 falling and 8 closing with prices unchanged. Market activity resulted in 156,799 shares valued at $1,663,812 changing hands, compared to 225,853 shares valued at $6,610,658 on Tuesday.
At close, the Composite Index declined 1.29 points to 1,262.83, the All T&T Index gained 0.47 points to 1,698.51, while the Cross Listed Index rose shed 0.29 points to close at 111.58.
IC bid-offer Indicator|At the end of trading, on Wednesday, the Investor’s Choice bid-offer indicator reading shows 2 stocks with bids lower than their last selling prices and 4 with lower offers.
Gains| Massy Holdings rose 10 cents and ended at $47.40, with 1,241 stock units changing hands and National Enterprises closed with a gain of 10 cents and completed trading at $9.75, with 145 units.
Losses| Clico Investments closed with a loss of 34 cents at $20.16, with 11,797 units, Grace Kennedy shed 5 cents and completed trading at $3.25, with 19,000 units, Guardian Holdings lost 1 cent and settled at $16, after exchanging 2,656 shares and Trinidad & Tobago NGL ended trading 25 cents lower at $27.50, after exchanging 8,638 shares.
Firm Trades| Ansa Merchant settled at $40, after exchanging 30 shares, First Caribbean International Bank settled at $9.35, after trading 25,000 shares, First Citizens concluded trading at $32.50, after exchanging 5,929 shares, JMMB Group ended at $1.85, with 11,211 stock units changing hands, National Flour settled at $1.70, after exchanging 9,000 shares. Sagicor Financial completed trading at $7.75, with 59,542 units, Trinidad Cement ended at $2.60, with 1,500 stock units changing hands and West Indian Tobacco settled at $88.50, after exchanging 1,110 shares.
Prices of securities trading for the day are those at which the last trade took place.
BOJ to buy US$17m from market
Bank of Jamaica will start the purchase of foreign exchange through their B-fxitt auctions with two weekly purchases scheduled for April announced in the banks four week forecast.
Since the end of November last year, Bank of Jamaica has had just two auctions of foreign exchange amounting to a total sale of $40 million.
The latest release on the banks foreign exchange market activity, show no sale planned over the next four weeks. The bank for the first time will have an auction to buy foreign currency from the market. Two B-fxitt auctions are so far announced for April, amounting to US$17 million, broken down into US$5 million on Wednesday April 11 and US$12 million on April 18.
BOJ holds policy rate
Bank of Jamaica maintains the policy interest rate at 2.75 percent, the central bank stated on Tuesday. The rate is paid by the central for the placement funds overnight placements with Bank of Jamaica and helps in guiding the setting of rates in the wider economy.
“This policy stance reflects the Bank’s assessment that headline inflation for the next eight quarters should remain within the target of 4 percent to 6 percent, with the risks assessed to be balanced. Over the next three quarters, inflation is expected to track close to the lower bound of the target, primarily reflecting a decline in food prices as a result of a recovery in agricultural supplies. Thereafter, headline inflation is expected to converge towards the centre of the target,” the central bank stated.
“The outlook for inflation continues to be underpinned by the expectation that the Government will maintain a strong fiscal performance in alignment with the fiscal rules. There remains a risk that GDP growth will be slower than anticipated given the influence of external events.”
Bank of Jamaica stated that the “decision to maintain an accommodative policy stance is aimed at supporting further credit expansion and faster GDP growth. When adjusted for expected inflation, the policy rate remains negative in real terms in a context of high liquidity in financial markets. These conditions are considered to be appropriate at this time given the weaker-than-desirable pace of credit expansion. The policy stance has supported downward adjustments to yields on medium and long-term GOJ bonds in recent times and these downward adjustments are expected to flow through to loan rates.
Jamaica’s macroeconomic indicators remain positive. Inflation expectations remain low and anchored around Bank of Jamaica’s target, international reserves are increasing, the current account of the balance of payments is low and projected to remain at sustainable levels, market interest rates are falling and fiscal performance continues to be strong.”
Palace is much more than Black Panther
Revenues and profit are getting a big lift from the strong showing of the Black Panther movie currently playing at the Palace Amusement cinemas in Jamaica.
The stock jumped sharply in March, more than doubling the previous price of $560. Some investors are of the view that interest in the stock is purely as a result of the movie. While it may be a factor, Palace’s story goes well beyond that.
Although in the public eyes daily, the shares of Palace are not the focus of attention for many . One main reason is the 1,437,000 shares issued by the company, resulting in limited liquidity in the stock. The other is that historically profit can be a bit erratic. Management’s failure to split the stock for greater liquidity only adds to investors’ concerns.
Palace is reminiscent of Lascelles deMercado back in 1983 when the stock hardly traded due to liquidity issues and a lousy dividend policy. Asked then why the stock was so cheap, around $6, a broker responded —no one buys
Lascelles’ shares. That of course was a terrible error by investors as the stock went on to deliver one of the best returns on the local market with Campari ultimately buying out the company.
Stocks that are not sexy don’t get much attention from investors, but in many cases, these are the ones to record massive gains when the story is fully told. A reader of IC Insider.com indicated that a look at the last two years’ results revealed flat revenues. That prompted a review of the numbers. The history may not be spectacular but closer examination shows a high degree of attractiveness that is not based solely on the pile of added income Black Panther will rake in.
Revenues have been climbing since 2014 when it reached $833 million, rising to $916 million in 2015, with a slight dip in 2016 to $909 million. Revenues rose 9 percent in 2017 to $990 million and for the half year to December 2017, growth was 11 percent to $493 million with profit rising 138 percent.
Revenues will hit the billion mark for the first time in the company’s history, for the current fiscal year and remain over that level going forward. The performance of the economy is critical to the future fortunes and to a lesser degree, the quality of films. Data indicates that with a tight economy, patronage in Kingston suffered badly with the downturn in the economy from 2008 onwards. At the same time, strong growth, said to be around 7 percent per annum in the Montego Bay economy, showed up in strong revenue gains there compared to Kingston for a number of years. With the overall economy recovering and employment growing, Palace is benefitting and it’s reflected in the numbers to December 2017.
Segment results tell the story of the strong impact of the economy on operations. For the six months to December, Box office patronage at Carib Cinema in Cross Roads rose 14 percent to $147 million, while at Palace Cineplex, the gains were 10 percent to $55 million and 8 percent at Palace Multiplex in Montego Bay to $77 million. Sales from the concessionaires surged 29 percent to $80 million at Carib, 22 percent at Cineplex to $27 million and 21 percent to $34 million at Multiplex. The fact that Carib has outgrown the other two cinemas is not an accident but is reflective of the recovery in disposable income of a large number of Jamaicans.
While revenues are on the rise, cost has been kept under control. Direct operating cost increased by 6 percent to $190 million for the quarter and 8 percent for the half year.
Administrative Expenses rose just 4 percent to $37 million in the December quarter and 7 percent for the six months to $76 million. Depreciation for the six months period rose just 5 percent to $17 million. If the trend continues into 2019 fiscal year earnings should be close to $100 per share range. Prior to Black Panther, earnings were set to reach around $45 per share but the phenomenal success of Black Panther is Projected by IC Insider.com to push 2018 earnings to be well over $100 per share when the fiscal year closes in June.
The company concluded the year with equity capital of $343 million, borrowings at just $25 million with cash funds of $130 million helping to push Current assets to $242 million as Current liabilities stand at $110 million.
The stock traded at $1,300 earlier in the month is poised to fall back with the lowest offer being $1,000. Palace trades on the main market of the Jamaica Stock Exchange at a PE around 10 times projected 2019 earnings and much lower based on the 2018 earnings.
Heavy foreign exchange trading – Tuesday
There was heavy trading in the foreign exchange on Tuesday with volumes exceeding the amounts purchased and sold on Monday as dealers continue to sell off excess US dollars.
The market closed with inflows of all currencies, ending at US$56.40 million, versus US$47.24 million on Monday. Dealers sold US$61.03 million in contrast to US$54.79 million, previously.
The buying and selling rates fell in US dollar trading but with smaller movements than on Monday. The rate to buy the US dollar fell against the Jamaican dollar by 12 cents while the buying rate by dealer was down by 11 cents.
In US dollar trading, dealers sold US$50.24 million at a rate of J$126.33 at the close, compared to US$50.75 million at a rate of J$126.45 on Monday. Purchases of the US currency by dealers, amounted to US$43.96 million at an average of $125.25, compared to US$44.27 million at an average of $125.36 on Monday.
At mid-day on Tuesday, dealers purchased US$14.77 million at an average rate of J$125.53 and sold US$15.72 million at an average of J$126.18. At mid-day on Monday dealers purchased US$19.12 million at an average rate of J$125.86 and sold US$27.58 million at an average of J$126.37.
The selling rate on Tuesday, for the Canadian dollar rose to J$99.02 from J$98.33 at the close on Monday, the selling rate for the British Pound increased to J$178.38 from J$176.63 previously and the euro fell against the Jamaican dollar to J$156.73 to buy the European common currency, versus the prior selling rate of J$158.26.