JSE trading at new record of 335,379 points

The Jamaica Stock Exchange main market is currently trading in record territory with the all Jamaica Composite index having surpassed the 334,000 mark around mid day, moved to more than 335,000 points just ahead of the close.
The market having surpassed the 334,000 points for the first time around midday, moved even higher to trade at level 335,379.45 points with 15 minutes to go before the close with a rise of 5,429.21 points.
The All Jamaica Composite Index rose 4,212.92 points to 334,155.76 points just after midday while the JSE index rose to 3,838,45 points to 304,460.03 points, Scotia Group trading at $52.99 and JMMB Group at $28 were the two major contributors to the market rise. Wisynco Group trades at $9.80 and accounted for the largest block of shares with 5.356 million units of the stock traded.The AJI ended at a record closing high of 332,501.11 points on May 4, this year.
The Junior Market at the same time plunged 64.06 to 2,947.20.Iron Rock traded 4.24 million units in the Junior Market and Blue Power traded 538,182 units with the price falling to $28 from $the last traded price of $37.

More ammunition for big JSE surge

Bulls just watching but taking no action while stocks are setting up for a big explosion.

The cut in Bank of Jamaica’s overnight policy rate, by 25 basis points to 2.5 percent and further decline in short term Treasury bill rates on Wednesday, are big shot in the arm for Jamaican stocks.
With a 15 percent fall in BOJ’s policy rate in 2018 so far, stocks are lagging behind, with an increase of just 6.6 percent for the Junior Market and 4 percent for the main market. The accompanying chart shows the fall in Treasury bill rates being far greater than the rise of the All Jamaica Composite Index, an indication of a lot more upside for stocks based on the downward movement of interest rates.
Investors seem to be focusing more on profits in valuing stocks than on interest rates so far. That will change. The fall in the overnight rate, translates to a 9 percent rise in stock market prices, but rates seem likely to decline some more before settling off providing more ammunition for more gains in stock prices.
The latest Treasury bill auction also points to falling rates, with the 91 days bill declining to 2.71 percent from 2.818 percent in April, while the 182 days instrument average rate ended at 2.83 percent, from 2.979 percent in April. The 272 days Treasury bill cleared at an average of 3.08 percent with the highest allotted yield being 3.4 percent. In The three offerings of $700 million each, attracted a total of just over $7 billion, an indication of the high liquidity in the market that will have a positive impact on stock prices.
With the fall in interest rates, the PE of money is at the high end 40 times income and using corporate bond 12 times, but the PE ratio should be more tied to Treasury Bill rates and that PE is now in 30 range but stocks are mostly in the low teens and below.
Stocks have not been helped by some of the 2018 first quarter results, coming in a period when the market traditionally goes into a recess until late early summer. While profits for a number of companies may not have been electric for the 2018 first quarter and prices have not moved much except in a few cases, a look behind orders indicates that supply for a number of stocks is very limited. Stationery and Office Supplies have just two offers at the close of Wednesday, with less than 10,500 share on offer. Access Financial, Barita, Berger, PanJam Investment, Salada Foods to name some, have very limited supplies and others could follow suit in a short while, most investors don’t seem to be paying much attention to the tsunami that is on the way that will see prices move sharply higher.

JSE trading in record territory

Kingston Wharves jumped to a record $50 in trading 2,600 shares on Friday morning on the main market of the Jamaica Stock Exchange and helped to push the All Jamaica Index to an all-time record.
At 11.22 am, the JSE All Jamaican Composite Index climbed 3,135.84 points to a to be in intraday record high territory of 328,106.42 and the JSE Index was up 2,850.36 points to 298,942.03 another record level. Jamaica Producers traded 1.85 million units and rose to $16.
The Junior Market was more subdued and traded with a rise of just 3.52 points rise to 2,904.67.

The huge stock market blast is coming soon

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Bulls may be lurching to pounce on Jamaican stocks.

The main market of the Jamaica Stock Exchange hit three new record closing highs this past week and is showing signs of climbing higher, much higher in fact.
That is a development that the general public is unaware of and smart investors cant take advantage of to make big gains in the months and probably years ahead.
The market has never had all the stars as lined up as they are now. Low Interest rates, the lowest on record in Jamaica, low inflation rate, a fluid foreign currency market. Liquid Jamaican dollars, of which the Governor of the country’s central bank Bryan Wynter, puts at $50 billion within the Banking sector. But it get even better. According the Wynter, interest rates are likely to go down some more as the high liquidity situation dictates it. The Jamaican dollar has been trading within a band of J$125 to 130 to the US dollar, a situation Wynter sees as likely to be the norm for sometime to come. Wynter who was speaking at special briefing on Friday, indicated that Jamaicans had better start getting used to this new development as there is enough foreign currency available in the system. A development which he things the new foreign exchange auction B-Fxitt, that the central bank manages has helped to foster with much more transparency in the market aided by market intelligence by both buyers and sellers as well as the central bank. But the new B-Fxitt is not the only factor at play. Not only that, according to the governor even as the bank cut the compulsory take form dealers by 10 percentage points, BOJ has not suffered lower intake as a result of increased flows, some of which Wynter attributes to the selling of US dollars by locals to go into more profitable form of local investments. Government’s tight fiscal discipline has gone a long way to creating and environment of stability within the economy and among the business sector.
Unbeknown to many, is the increased spending by government in March, well above what was originally planned. For investors this means more money in the hands of consumers, more sales and profit for listed companies, that now seems to be showing up in the coffers of corporate Jamaica.
So where is the stock market in all of this? The junior market is up 8 percent year to date, but main market stocks have just crawled a mere 3 percent, the latter wont being performing so poorly much longer. This short term chart shows two channels that the market is trading within. The market is trading closer to the upper resistance line shown in red. The lower blue line has been steering the market slightly side wards with an upward bias. A very important feature, which is not shown in the attached chart, is an extremely bullish formation shown on a longer term chart. That chart shows the market now caught up in a wedge formation with the top being around 335,000 points using the all Jamaica Composite index. With the recent market moves, it appears that the wedge is going to give way and herald a huge rise upwards in the market and that in going to happen within a few weeks, probably after first quarter results are released starting in late April.

JSE at record high at opening

The Jamaica Stock Exchange hit a new record within 1 minute of today’s opening with the JSE All Jamaican Composite Index jumping 4,576.37 points to 327,071.44 and the JSE Index climbing 4,169.59 points to a record 297,999.05.
The move beat the previous record intraday high reached on March 9 of when the JSE All Jamaican Composite Index (AJI) surged 6,583.63 points to 325,588.39 and the JSE Index jumped 5,998.43 points to a record 296,647.83 at 10.26 in the morning session.
The Junior Market Index put on 11.32 points to trade at 2,942.63 as Express Catering jumped to $5.25 from $4.50 on Friday, following release of nine months results showing profit increasing 166 percent.
With just 5 minutes to 11am the gains for the main market were trimmed with the AJI being up 3,075.18 points to 325,570.25 and the JSE index was up 2,808.68 to 296,638.14 with the Junior Market index being up 15.45 points to 2,946.76.

Great period ahead for stocks

Interest rates are falling and will drive stocks higher in 2018.

Last year was a great one for Jamaican stocks but an assessment of the market suggests that 2018 could be a grand year as well with overall price gains likely to be in excess of 40 percent.
Based on projected earnings for 2018, the average PE ratio suggests that the main market stock prices should grow by 26 percent and Junior Market by 36 percent. Falling interest rates could add another 20 percent to gains during the year, bringing them to be in excess of 40 percent.
Technical readings of the markets have the main market heading initially to around 390,000 points or 23 percent ahead of the December close, for the all Jamaica Index, with the junior market moving to 3,900 points, 43 percent higher than the end of 2017, before resistance sets in. Before moving much higher, the Junior Market must break through the 3,000 and 3,200 levels which were set when the market dropped after Lasco Distributors fell from the $7 level to below $4 late in 2017, helped by a fall in Lasco manufacturing.
Last year was a great one for Jamaican stocks, with 14 of the 64 ordinary shares of companies that were listed prior to the December new listings, rising 100 percent or more and 16 rising between 50 and 81 percent.
Although, the Junior and Main Market index rose just 5.3 percent and 51 percent respectively, at the end of the year, only 9 of the 34 listings at the end of the year recorded losses, while the main market recorded just 5 declining stocks.

Elite Diagnostics is the first 2018 IPO out of 9, that is expected this year.

Importantly, the average gains for the Junior Market is 79 percent and losses, averaging of 20 percent, for a net gain of 59 percent. The average main market stock rose 68 percent while losses averaged 22 percent, for a net of 48 percent.
2017 IPOS|The past year saw 9 new companies listing on the exchange, another 9 could list in 2018. If the trend of the 2017 IPOs with all ordinary IPO shares rising, repeats for 2018 IPOs, then investors can look forward to another round of profitable new offerings. Added to that, a number of last year’s listings should continue to deliver above average returns in 2018.
Stocks to grow in 2018| IC Insider.com projects a better performance in the Junior Market Index in 2018 than for 2017 but the main market may be challenged to deliver a similar performance. Many of the main market heavy weights will find it tough to repeat the strong gains they enjoyed in 2017, if that is the case, their impact on the market index is likely to be less than for 2017. Another factor that could make a repeat of 2017 tough, is the movement of interest rates. Last year, Treasury bill rates fell 29 percent from 6.56 percent to 4.83 percent, that level of decline, is unlikely to happen in 2018, even as some of the decline in the latter part of 2017 is yet to be fully reflected in the prices of stocks to date and should positively affect prices in 2018. IC Insider.com is forecasting rates on 182 days Treasury bill hitting 4 percent by the end of the 2018 first quarter. New listings could help move the indices in 2018, the likely impact on them is unknown at this point.

Growth in tourism is expected to directly impact a number of companies positively in 2018.

Increasing GDP| There are a number of other factors at play that are set to impact the market. Increasing employment taking place should continue in 2018 as economic activity gains momentum, this will mean more spending and increased tax collection for government. Alpart resumption of Alumina production is a big positive for the overall economy, for increased government revenues and increased demand for local goods and services, some of which are provided by listed companies. The tourism sector is enjoying strong growth, apart from increasing foreign exchange intake for the country, will have direct impact on Jamaica Producers, Dolphin Cove, Express Catering, Caribbean Producers and Sagicor X Fund. Jamaica seems to be going through a construction boom with several new buildings under construction, Caribbean Cement and Berger Paints should benefit considerably while Blue Power’s lumber segment should see improved sales from such developments.
Lower interest rates mean lower cost for many companies and revaluation of the Jamaican dollar also means lower cost but could result in lower revenues in some cases. More listing on the market means more fee income for JSE and brokerage houses, from increased trading volumes.

Junior stocks beat majors in 2017

Junior market stocks performed better than main market stocks in 2017 but that performance does not show in the gains in the market indices of both markets.
A cursory look at the Junior and Main Market indices would lead to the conclusion that investors in the main market were far better off in 2017 that their Junior Market counter path. Such a conclusion would be completely wrong. The Junior Market rose just 5.3 percent at the end of the year, down from a high of 31 percent in May, compared with almost 51 percent gain for the main market for, the full year.
Data is showing that while the Junior Market index was barely up, 8 stocks gained more than 100 percent compared to 6 in the main market. 7 Junior Market stocks rose between 50 percent and 76 percent and 9 gained between 52 percent and 81 percent in the main market. Importantly, the average gains for the Junior Market is 79 percent and losses, an average of 20 percent for a net gain of 59 percent. The average main market stock rose 68 percent while losses averaged 22 percent, a net of 48 percent.
A 43 percent fall in the price of the heavily weighted, Lasco Distributors and 14 percent in Lasco Manufacturing dented the Junior Market index in a big way.
The main market benefitted from big gains in heavy weighted, Supreme Ventures, NCB Financial, Jamaica Producers, JMMB Group, Carreras and Scotia Group with increases of 61 to 100 percent. Added to that PanJam Investment gained 60 percent, Cable and Wireless 56 percent and Sagicor Group 31 percent.

Bulls take charge of Exchange Place

Bulls at large in down town Kingston again

The Main Market of the Jamaica Stock Exchange closed at another record on Friday with 21 securities changing hands in the main market and 3 in the US dollar market and 22 in the Junior Market.
At the close, the JSE All Jamaican Composite Index jumped 8,028.94 points to a record close of 313,990.54 and the JSE Index to surged 7,315.27 points to 286,080.89. The Junior Market rose 48.58 points to end the week at 3,034.13. The US dollar Index fell 2.29 points to 183.01.

Friday’s move pushed the market outside of the medium term channel it has been trading in since 2014 and if the price of NCB holds, the break out for the market will be significant as it move on to the 360,000 points level.
NCB Financial traded at a new record of $107 and is ahead of the $102 it traded at in Trinidad on Friday, up until today it trailed the price of J$100 it was trading at in the twin island state. Berger Paints traded at $14, after news broke on Thursday that only 6.6 million shares were sold by minority shareholders to Ansa Coating following the company’s mandatory offer of $10.88 per share. Attempts were made to trade it as high as $17.50 but the price exceeded the 30 percent limit it could trade at for the day and was cancelled at the close of the market. Trading closed with bids to buy Berger ranging from a low of $11.02 to a high of $14 to purchase 259,773 shares, 204,458 units are on sale from a low of $16.75 for 41,583 units to mostly 89,388 at $22.
For the year to date, the All Jamaican Composite Index is up 49.4 percent and the JSE Index 48.8 percent.
In the foreign exchange market at midday dealers bought US$13,372,228 at J$127.31 and sold US$11,367,821 at J$127.74.

All-time high for JSE in early trading

The Jamaica Stock Exchange main market is trading in record territory just after opening on Friday morning.
Trading on the Main Market saw the JSE All Jamaican Composite Index rising 2,955.43 points to record close of 298,567.15 and pushed gains for the year to date up by 42 percent. The JSE Index jumped 2,692.74 points to record close at 272,028.45, the Combined Index surged 2,465.92 points to a record 282,248.23.
The Junior Market index slipped 1.42 points to 2,945.06 as trading in that market continues to lag that of the main market as investors seem to have refocused on the more matured companies that are listed on the main market.
At the current levels, the market is sitting just below the short term resistance level of 300,000 points and seems set to attach it soon.

NCB Capital assesses JSE market

The stock market continued its upward trajectory in 2017. Year to date, market performance has been significantly stronger than 2016 with the Main Market Index returning 32.94 percent as at August 2017 compared to 6.43 percent for the corresponding period last year.
The Combined, returned 31.2 percent, Junior Market 19.48 percent and All Jamaica Composite Index and 33.6 percent, for the calendar year to August 31, 2017 relative to increases of 8.4 percent, 23.78 percent and 6.6 percent, respectively for the 2016 corresponding period.
Improvement in Jamaica’s macroeconomic fundamentals have boosted business confidence and contributed to a positive outlook for corporate earnings. In addition, increased investor confidence and appetite for riskier assets continue to drive market activity despite the run up in prices.
Stock price appreciation was broad-based with the strongest performers being in the main sectors of manufacturing, financial services and conglomerates. In particular, the manufacturing and financial sectors accounted for six of the top ten advancing stocks during the period. Financials continue to churn out positive earnings on the backdrop of significant growth in private sector credit.

NCB Financial Group profit surged in 2017, helping with other financial stocks to push the JSE higher.

The annual growth in private sector credit at end-February 2017 was 30.7 percent, which was stronger than the expansion of 10 percent in February 2016. Financials have been successful in weathering the low interest rate environment as margins have generally remained stable and fee income growth has been robust. Furthermore, low rates have helped to drive loan portfolio growth while fees and commission income have played a major role in income diversification. The manufacturing sector experienced some expansion buoyed by strong local demand for consumer products and growing export markets in the Food and Beverages segment. Additionally, Jamaican dollar appreciation within the earlier part of Q1 supported the performance of firms with a more concentrated focus on domestic operations. Of note inflation has remained subdued which has also assisted in increasing efficiency and improving margins.
While economic growth outturn was flat during the first quarter of the year, macroeconomic conditions remain stable and augers well for business operating environment. Against this background, the market should see improved activity and an uptick in the number of listed firms aided by the reinstatement of the Junior Market incentives in the last quarter of 2016.

The above is an extract  from The NCB Capital Markets’ September 2017 stock market recommendations.