NCB Capital stock talk

NCB Capital Markets (NCBCM) recommends that investors maintain focus on stocks of companies with diversified revenue streams by operations, geography and currency in its latest recommendations on the Jamaican stock market.
According to the brokerage house, main market companies tend to have more mature operations, stronger fundamentals and are likely to pay more attractive dividends for investors heavily dependent on cash flows. This should form the core of a moderate investor’s equity portfolio. Investors with the appropriate risk appetite should also take a closer look at some Junior Market stocks given that the potential for growth is greater than their main market counterparts. More aggressive investors should also consider taking an active approach to stock market investing by crystalizing gains on stocks that are trading above their fair value estimates, with a view to re-enter at more favourable prices in the near term.

Jamaica Broilers is a recommended buy by NCBCM

Interestingly, there are only three stocks recommended as buys, with six stocks placed on the sell list.
NCBCM recommends investors buy Jamaica Broiler with a forward price of $24, JMMB Group with a forward price of $23.80 and PanJam Investment with a forward price of $43.63.
The brokerage house is recommending selling Caribbean Cement, based on their assessment that the fair value price for the cement producer is $29.92 which is below the current price of $29.99, also on the sell list is Honey Bun, that they are saying that the PE ratio and price to book multiples for Junior Market manufacturing companies were used to derive a fair value estimate of HONBUN with a forward price of $3.70. Jamaica Producers is on the sell list as well with a forward price of $12.99 based on a price to book valuation, Mayberry Investments’ forward price is put at $3.95 and therefore a sell NCBCM says. The fair value of Scotia Group is estimated at $46.48, which is below the current price. The projected dividend yield of 3.5% is not sufficient to offset expected capital loss the NCB Financial brokerage arm says.

Scotiabank is a recommended sell by NCBCM

Stocks that are recommended as holds are Carreras based on the justified P/E and Dividend Discount Model resulted in valuation for Carreras up to $113.91 per share. Kingston Wharves forward price is $29.24, close to existing market price and Sagicor Group with fair value estimate of $34.21.
Ratings Definitions| BUY: The company has sound or improving fundamentals that should allow it to outperform the broader market over the next 12 months. The risk factors to achieving price targets are minimal.
HOLD: We believe the stock is fairly valued at the current price. The company may have issues affecting fundamentals that could take some time to resolve. The risk factors to achieving price targets are moderate. Some volatility is expected.
SELL: The stock is overpriced relative to the soundness of the company’s fundamentals and long-term prospects or the stock is fully priced.

Earlier JSE trade settlement coming

Investor in securities listed on the Jamaica Stock Exchange (JSE) starting December 11, this year, will see a change in the time required to settle transactions, from 3 days to 2.
The stock exchange and Jamaica Central Securities Depository (JCSD), will change the time for settlement of transactions from the current period of trade date plus three (3) days (T+3) to trade date plus two (2) days (T+2).
According to the exchange, “this faster settlement cycle will align the JCSD to International Standards, facilitate Increased liquidity and better cash management for stockbrokers and investors, and be generally more efficient for all stakeholders.”
“The change to T+2 will see the JSE on par with other global markets by the end of 2017,” said JSE’s Managing Director, Marlene Street Forrest.

Critical trend investors must watch

Interest movements have a telling effect on the movement of stock prices and every investor should keep a keen eye on the direction of interest rates for clues to the direction of the market.
Interest rate movement is only one factor, the other critical one is profit. The attached chart shows clearly the relationship between the two and highlights the sharp rise in the JSE against the steep fall in interest rates from 9.1 percent to 5.45 percent now for the 182 days instrument.
Why investors need to keep an eye on interest rates? Apart from the relationship with stocks, the chart of the trend of Treasury bill rates, shows resistance just below 6 percent to rates falling, now solidly broken, with the likelihood of rates on Treasury bills, heading to the 4 percent range before too long. Such a fall would translate to about a Twenty five percent fall in rates and by extension, a rise to around the same level in the value of stocks, assuming no change in profit expectation and would push the All Jamaica Composite index to 360,000 points.

JSE AJI breaks 290,000 points

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Helped by a jump of $2.99 in the price of Scotia Group shares in the early morning session on Tuesday to reach a record $54.99, the All Jamaica Composite Index is up to record levels, breaking through the critical resistance of 290,000 points.
The move today have lifted the gains in All Jamaica by an impressive 38 percent for year to date. If the market continues to hold above the 290,000 points mark, it could be setting up for a huge rally ahead with no major resistance levels in sight for sometime to come.
The market index sits just above the resistance level, having exceeded the level at 10.30 earlier in trading today before Scotia Group price fell back to $51.60, after trading just 2,384 shares for the day so far.
At 10:30am, the All Jamaica Composite Index rose 2,173.29 points to 290,234.60, the JSE Market Index rose 1,980.12 points to 264,436.58 and the JSE US dollar market index remained at 198.22 and the Junior Market lost 4.13 points to 3,071.28.

JSE just below resistance at 190,000 points

The main market of the Jamaica Stock Exchange surged to a new high at 12.30 pm on Friday with the all Jamaica Composite index jumping 8,505.30 points to a record 289,062.69 while the main market index rose 7,749.29 points to a record 263,368.84.
The Combined Index jumped 7,344.21 points to a record 276,121.30 as market sentiments suggest that the market may be at an early stage of a major bull run. The junior market that slipped 1.95 points at 11am is now up 18.94 to 3,117.84 while the US dollar market index that was unchnaged at 182.58 in the morning session is now up4.60 to 187.18.
Scotia Group is a mjor contributor to the big market gain with the privce jumping to $52 and only 389 units are now offered at $52. Supreme Ventures traded at a new high of $12.90 but sits at $12.50 with half an hour of trading to go.

New record for JSE main market

The main market of the Jamaica Stock Exchange surged to a new high at 11 am on Friday with the all Jamaica Composite index jumping 4,315.47 points to a record 284,872.86 while the main market index rose 3,931.88 points to a record 259,551.43.
The Combined Index climbed 3,602.38 points to a record 272,379.47 as market sentiments suggest that the market may be at an early stage of a major bull run. The Junior Market slipped 1.95 points to 3,096.95 while the US dollar market index is unchanged at 182.58.
Sagicor Group traded 242,800 units valued $8 million and Lasco Distributors had 214,992 units trading valued at $1,68 million and Salada Foods had 100,000 units changing hands with a gain of 50 cents to $8.50.

Two financial stocks return to TOP 10

Unlike last week when there were several changes to the TOP 10 lists, this past week had just two changes, with Lasco Financial returning to the junior market and Sagicor Group to the Main market lists.
CAC 2000 dropped out of the Junior Marketlisting, allowing for the return of Lasco Financial that dropped sharply in price, to close the week at $3.40. Mayberry Investments was edged out by Sagicor Group, dropping from $34.35 to $31.75 at the close of the past week.
Former TOP main market value stock, Barita Investments moved up from $9.40 during the previous week to close at $11.60 for a gain of more than 273 percent since September last year. The most recent Initial Public Offering, Stationery and Office Supplies that exited the TOP 10 after listing in the prior week, is fluctuating between $4 and just over $5, and should undergo some amount of wide price movements until demand and supply find some balance. JMMB Group climbed to $23 on Friday before closing back at $21.45, supply has dried up for this stock and it seems to be readying to make an early exit in the next few weeks.
The average PE ratio for the Junior Market Top stocks is at 7.5 and the PE for the main market TOP 10, ends the week at 7.2. The average PE for the overall main market trades at 13.3 and 13.2 for Junior Market, based on 2017 estimated earnings.
At the close of the week, IC Insider.com’s TOP 10 stocks now trade at an average discount of 42 percent to the average of the market for Junior Market Top stocks and it remains at 46 percent for the main market.

JSE AJI index flirts with 280,000 points

Jamaica Stock Exchange main market indices surged sharply by the mid-day to come within a shade of a new resistance level of 280,000 point on the all Jamaica index.
By Mid-day the All Jamaica Composite Index hit a new all-time high of 279,335.69, after surging a huge 6,471.87 points at 11:50 but by mid-day it was up 5,527.76 to 278,391.58. The JSE Market Index jumped 5,896.61 points to a record 254,506.45 and at mid-day it was up 5,036.42 to 253,646.26 and the Combined index leaped 5,738.73 points to 268,155.40 at 11:50 and by mid-day it rose 5,041.53 to 267,458.20. The Junior Market index rose 37.30 points to 3,145.49 at mid-day.

JSE response to Express Catering trading fiasco article

Kino Williamson (l), Head of Finance, Cable Bahamas Ltd. points to the USD label while Scotia Investment CEO, Lissant Mitchell points to the JMD label. Also sharing the moment (from left) are Marlene Street Forrest, Managing Director Jamaica Stock Exchange, John Gomez, COO Cable Bahamas and Dylan Coke, VP Originations & Capital Markets, Scotia Investments

Mrs. Marlene Street Forrest, Managing Director of the Jamaica Stock Exchange responded to articles on Express Catering that were published on July 21, 2017 by IC Insider.com
The response to the Article
Article Sentence 1: “The Jamaica Stock Exchange indicated that the maximum price Express Catering could trade at on Friday was $1.86 which came about from a 15 percent average, of the price that triggered the circuit breaker which is $1.75 and the IPO price of $1.50.”
JSE Market Operations & Trade Response: This statement is partially incorrect. The price that triggered the circuit breaker was $1.74 and not $1.75.

The maximum trade price of $1.86 for ECL on Friday is correctly stated. With reference to the circuit breaker rule, which states that “No stock should trade +/-15% from the close price…” and noting that the previous close price is the current day’s open price, the (open) price of $1.50 was used to determine the trade range for ECL. With reference to the following section of the circuit breaker rule, which states that “…a simple average of the trigger price and the close price, will be used to determine the trade range for the remainder of the day” an average of the price of $1.50 and the trigger price of $1.74 was calculated to determine the trade range for the remainder of the day. The average price was $1.62 and the trade range for ECL on Friday was $1.38 to $1.86, which was +-15% of $1.62.

Article Sentence 2: “Had the first trade, taken place at $1.95 it would have shut down trading in the stock for an hour, but that price would have stood, being 30 percent above the IPO price.”

JSE Market Operations & Trade Response: This statement is correct. The price of $1.95 is within the 30% range and the trade would have remained if it was the trade that triggered the circuit breaker.

Article Sentences 3 to 5: “Regardless, investors placed a large number of bids to acquire the stock which was heavily oversubscribed, when the shares were issued to the public. The attached picture shows the bids above $2.20 at the close which are expected to be cancelled, with the closing bids limited to $2 which is the indicative starting price on Monday. That price will determine the maximum price the stock can trade at on Monday.”

The Jamaica Stock Exchnage subsidiary

JSE Market Operations & Trade Response: This is correct. The Price Limitation of the Close Bid and Close Ask policy states that “the close bid should not be more than 15% of the close price…” Consequently all bids greater than 15% of the close price of $1.74 were cancelled from the trading system. 134 buy orders were cancelled and the respective traders were advised of the cancellations. $2.00 is 15% of ECL’s close price of $1.74; the highest price permitted for the ECL close bid. The close bid at $2.00 is the effective close price on Monday, July 24, 2017 and will be used to determine the trade range.

Article Sentences 6 to 9: “Something must be wrong if investors can place orders into the system only to see them manually cancelled by the exchange after trading ends. This development is public relations and bad news for the exchange, but not many persons seem to care. The circuit breaker rule put in place to try and prevent wild daily movements in a stock prices seems to have out lived its life. It is not working well with new listings as it is preventing orderly trading in most new listings in the early days of trading.”

JSE Market Operations & Trade Response: The practice of manually removing orders that fall outside of the 15% limit has been in place since the implementation of the Price Limitation of the Close Bid and Close Ask policy.

Article Paragraph 3: According to an extract sent by the Jamaica Stock Exchange the Circuit Breaker Rule states that “No stock should trade +/-15% from the close price or the effective close price at the opening of the market. The effective close price is determined whenever the closing bid is greater than the close price or whenever the closing ask is less than the close price. Use the closing bid as the effective close price, if the value is greater than the close price or use the closing ask as the effective close price, if the value is less than the close price. However, during the day if the Circuit Breaker is triggered for a security, the trades at prices outside of the original prescribed band for the security will be disallowed for an hour to allow for the release of market news and a cool down period. The price of the trade that triggered the Circuit Breaker should not be +/-15% outside of the original prescribed price band. After the hour has passed the security will be released for trading within a new prescribed price band based on the new reference price, which is a simple average of the trigger price and the close price. The new reference price will be used to determine the trade range for the remainder of the day. The stock will not be allowed to trade +/- 15% of the new reference price.”

Starbucks one of the brand Express Catering will sell at the Montego Bay Airport.

JSE Market Operations & Trade Response: The circuit breaker rule.

Article Paragraph 4: “If it is were conceded that there is need for a daily price limit, the above rules have been made more complex than needs be the case. There is no logic in limiting one stock to trade at a 30 percent above the last traded price or indicative price and another to be limited to a lesser amount on the same day because an investor buys a stock at 30 percent above the prior days last price another at 15.1 percent above it which limits the trading for the rest of the day to less than 30 percent in the latter case. The new rules that were approved by the stock exchange in 2014 made no reference to a limit to the bid or offer that can be made during the day, exchange personnel have decided amongst themselves to improperly invoke the additional change that limits trading unnecessarily. The stock exchange should make good sense prevail and allow the above rules to be implemented fully as stated without the introduction of rules that the updated regulations do not include and from all indications were not signed off by the stock exchange council, went the change was submitted for approval. If that is done, it would remove the nonsense that now prevails in the Express Catering trading, with a huge line up of bids above $2 that are slated to be cancelled after trading today.”

JSE Market Operations & Trade Response: The Price Limitation of the Close Bid and Close Ask policy was implemented in 2014 after the circuit breaker rule was amended in order to effectively apply the revised circuit breaker rule, specifically the section of the circuit breaker which states that “The price of the trade that triggered the Circuit Breaker should not be +/-15% outside of the original prescribed price band.”

Summary
The amended circuit breaker rule has been consistently applied over the last three years. It was amended to provide increased liquidity during any one trading day. The amending of the circuit breaker rule was done to ensure that there was adequate cooling off period and adjust to market conditions.

In the case of the trading in ECL, there was no trading fiasco. The circuit breaker rule was properly applied and had no bearing on any issues with the new trading platform.

JSE markets down in early trading

Its just 11:21 am on Tuesday and all market indices are down on the Jamaica Stock Exchange, in moderate trading. The main market index slipped 1,032.30 to 238,385.52.
The Combined index is off 1,092.87 points to 255,033.81, the All Jamaica Composite fell 1,133.01 points to 261,642.03 the Junior Market index sits at 3,304.07 to be off 13.21 and the US dollar index slipped modestly to end be at 214.77, the markets are recovering slightly from steeper declines earlier in the trading session.
The fall in the markets follow fairly sizable declines on Monday.