On Friday, July 5 investors in the Bank of Jamaica’s 28 days $37 billion CDs auction received an average interest rate of 9.91 percent with the highest successful rate at 10.249 percent, resulting in $141.5 billion being siphoned out of the financial market, with 299 successful bids out of a total 377 bids.
On July 12, Bank of Jamaica offered just $9 billion in CDs were offered, reducing the outstanding CDS to $139.5 billion, after attracting 278 bids covering $24.9 billion with just 74 successful bids from a high of 9.65 percent to a low of 8.50, with an average of 9.40 percent.
In the past week, Bank of Jamaica offered $36 billion and obtained 472 bids amounting to $52.68 billion with 392 succeeding with an average rate of 9.47 percent. The highest successful rate came out at 9.85 percent, the total amount of the 28 days CDS stood at $135 billion.
The average of the above rates is well below 11.90 percent on April 17 when the total amount of 28 days CDS was $155 billion.
The latest offering of $50 billion today is lower than the $53 billion that expires on Friday and is in line with BOJ’s commitment to ease liquidity within the financial market.
Falling interest rates
Share buy back & dividend at Kingston Properties
Kingston Properties (KPREIT) plans to repurchase up to one half of one percent or 4.42 million shares in issue for up to two years to commence in the later part of May this year.
According to the release, “the Board of Directors sees this use of capital as an opportunity to enhance shareholder value through the purchase, from time to time, of undervalued shares”.
The repurchase of the shares will be done using the Company’s cash flows and will be conducted on the open market through the Company’s stockbrokers. A fixed price for the repurchase will not be set but will be the market price at the time of the repurchase. In keeping with the requirements of the Companies Act of Jamaica, within 30 days of the dates of the repurchase of shares, Kingston Properties will advise its shareholders of the details of the shares purchased.
The company has 884 million issued shares that were last traded at $8.10 on the Main Market of the Jamaica Stock Exchange with a PE of 10 times last year’s earnings and a book value of $8.40.
A total of 7.5 million shares were traded over the past twelve months for a daily average of 30,000 units.
The company has also declared a dividend of 0.0566 US cents per share, payable on June 5 to shareholders on record at May 17 with the ex-dividend date of May 16, 2024.
The company reported a profit of US$4.65 million in 2023 an increase over 2022 with US$3.8 million from operating revenues of US$4 million in 2023 and US$3.5 million in 2022. Profit was boosted by gains from revaluation and gain on sale of properties of US$3 million in 2023 and US$2.4 million in 2022.
Big fall for JSE Main Market USD Market up
The Junior Market of the Jamaica Stock Exchange stayed above the 3,800 mark that it reached on Wednesday but slipped marginally at the close after rising sharply in the morning session, the JSE USD Market bounced during the day, but the Main Market declined sharply for a second day, the fourth day of decline since last week Friday, following increased trading over Wednesday.
At the close of trading, the JSE Combined Market Index dropped 3,572.73 points to 342,592.8, the All Jamaican Composite Index dived 4,628.88 points to 363,894.60, the JSE Main Index plunged 3,811.14 points to 329,820.27, the Junior Market Index dipped 1.81 points to settle at 3,806.88 and the JSE USD Market Index rose 9.27 points to close at 238,86.
Preference shares that are not in the Main Market TOP10 graphs are Eppley 5% preference share, that fell $3 to close at $17, Eppley 7.50% preference share with a fall of $1.28 to close at $6.20, while Jamaica Public Service 7% dipped $14.77 to $63.83 and 138 Student Living preference share dropped $13.99 and ended at $74.
At the close, investors exchanged 19,714,383 shares in all three markets, up from 9,796,640 units on Wednesday, with the value of stocks trading amounting to $161.15 million, down from $58.16 million on Wednesday. Trading on the JSE USD market resulted in investors exchanging 269,277 shares for US$11,912 compared to 757,348 units at US$ 10,500 on Wednesday.
The market’s PE ratio ended at 18.3 on 2022-23 earnings and 11.3 times those for 2023-24 at the close of trading.
Investors need pertinent information to successfully navigate numerous investment options in the local stock market. The ICInsider.com PE ratio chart and the more detailed daily report charts provide investors with regularly updated information to help decision-making.
Investors should use the chart to help make rational decisions when investing in stocks close to the average for the sector and not going too far from it unless there are compelling reasons to do so. This approach helps to remove emotions from investment decisions and put in on fundamentals while at the same time not being too far from the majority of investors. Investors who buy when the price of a stock is close to the average will find that they are not inclined to overpay for a stock.
The ICInsider.com PE ratio chart covers all ordinary shares on the Jamaica Stock Exchange and shows companies grouped on an industry basis, allowing easy comparisons between the same sector companies and the overall market.
The net asset value of each company is reported as a guide to assess the value of stocks based on this measure quickly. The chart also shows daily changes in stock prices and the percentage year to date price movement based on the last traded prices.
Dividends paid or payable and yields for each company are shown in the Main and Junior Markets’ daily report charts, along with the closing volume pertaining to the highest bid and the lowest offer for each company.
The EPS & PE ratios are based on 2021 and 2022 actual or projected earnings, excluding major one off items. The PE Ratio is the most popular measure used to determine the value of stocks.
The Lagoon townhouses Cayman
The Lagoons in Georgetown, Cayman Islands.
The Lagoon townhouse complex in the Cayman Islands, a joint venture development between Proven REIT Limited and Infinity Capital Partners, is slated for completion and delivery of units in early 2023, a spoke person for Infinity Capital Partners advised ICIsider.com.
The complex comprises 13 residential units comprising nine two-bedroom and four three bedrooms townhouses in Georgetown, the capital of the country are all sold.
The units were priced at CI$520,000 for the two-bedroom units and $675,000 for the three-bedroom units. That amounts to US$624,000 and US$810,000. Converted to Jamaica dollar, put prices at JS$960,000 and J$1.247 million. The unit sizes range up to around 1,600 square feet for the three-bedroom units and slightly less for the two-bedroom units.
Real estate prices rise over 600%
Real estate values have climbed sharply in Jamaica since 2001, resulting in 639 percent returns based on selling prices of units to 2021, excluding ongoing income and expenses. Prices are based on properties in Kingston, the most active market in Jamaica, as such actual values may therefore vary in other areas of the country.
Dulwich studio & 2 bedroom units starting at $31,000 per square foot.
The data is compiled by ICInsider.com based on selling prices of up-market units that include mostly two and three bedrooms units in gated residences, using selling prices per square foot of each unit. For this year, the average price of a number of units was used, which works out at $30,700 per square foot, compared to approximately $3,850 per square foot back in 2001.
Investors who bought properties using mortgage funding would have enjoyed greater gains than the above. A purchase using a 70 percent mortgage would have provided a gain of 2,130 percent. Persons like to compare local investments with the movement between the USA and Jamaican dollars. Data shows that an investment in the US dollar would have increased just 257 percent between 2001 and 2021.
The market is now more diverse than a few years ago, with prices per square foot as high as $67,199 for a 1,564 square foot 2 bedroom to be built by as the Residences of Terra Nova on Merrick Avenue, Kingston 10 on lands adjoining the Terra Nova Hotel, will set back investors by $105,098,454.
Interior of Model unit at East Oakridge apartment complex
Prices of a number of inputs in the building residential units have gone up since the latter part of 2020, with steel by about 30 percent and lumber more than doubling and had tripled early in 2021 over 2020 prices while shipping cost for many other inputs being up as well. Cement and labour costs remain fairly stable on a square footage basis, as would professional fees and government taxes. Some in the building industry see the increased prices for imported input pushing the cost of development above normal annual increases as such cost per square foot could climb above the normal for newer units coming to market.
Cement production surges with big Q1 profit
Three months after Caribbean Cement Company announced its 2020 record cement production of 940,000 metric tons results, approximately 78,000 per month, the company recently reports the production of more than 100,000 metric tonnes of cement in a month in March. It marks the highest monthly production in recent history, the company reported.
“The trend for this quarter is of a higher average than that of the past ten years and is in response to domestic market demand”, a release from the company stated.
In 2020, the company had sales of $20 billion, up 13 percent from $17.8 billion in 2019, with a profit of $3.2 billion, up from $1.9 billion. In the first quarter of 2020, revenues grew by two percent to $4.5 billion, but profit fell to $453 million from $1.1 billion in 2019. In the 2020 first quarter, there was a loss on foreign exchange of $282 million. The company reduced most of its foreign currency exposure. As such there should be minimal exchange losses in the 2021 first quarter.
The company reported sales of $5.77 billion in the September quarter sales were approximately 270,000 tons and in December 2020, quarter sales was around 310,000 resulting in revenues of $6.6 billion.
ICInsider.com estimate revenues to be slightly ahead of the December quarter and has upgraded projections of revenues to $26 billion for 2021 with a net profit of $7.2 billion for EPS of $8.50, up from $6.70 previously.
Cement production is one of many bright spots in the Jamaican economy in 2020 and the current year. The companies shares are listed on the Jamaica Stock Exchange and last traded at $73 with a PE of 8.6 times 2021 earnings and a projected stock price of $160 by early 2022.
Sharp slash to interest rates
Bank of Jamaica slashed their overnight policy interest rate by a hefty 50 basis points to 0.75 percent per annum, effective 20 May 2019.
This decision reflects Bank of Jamaica’s assessment that inflation will remain low for until the end of 2020 as well as provide added stimulant for faster economic growth.
The reality is that there is a huge disparity between the move by the central bank and government policy. While the central bank lowers the rate to stimulate the economy, the government has artificially helped in keeping bank lending rates much higher than needed by taxing customers of banks by high taxes on banks that is resulting in interest rates being around 3 percent points higher than they should. This is where the focus needs to be and not on lowering on savings rate.
Low inflation is here to stay, despite the central bank’s continued focus on an excessively high 4 to 6 percent range. The lowering of interest rates is hurting savers particularly pensioners who have to rely on savings.
According to Bank of Jamaica, the decision is intended to stimulate an even faster expansion in private sector credit which should lead to higher economic activity, consistent with the inflation target. The move also comes at the same time that the bank announced the lowering of the cash reserves that commercial banks need to keep with the central.
What are the implications, investors looking for yields on local bonds will be getting less on the dollar for savings. Stocks will become more attractive as dividends in a number of cases are paying more than Treasury bill rates that sits at 2 percent per annum. Real estate will benefit from more demand as an alternate form of investing.
Eppley Carib Property considers JSE listing
Eppley Caribbean Property Fund is now being managed by Eppley, a Jamaican listed company
Eppley Caribbean Property Fund SCC announced its intention to cross-list the cellular shares of the Value Fund (“the Value Fund Shares”) on the Jamaica Stock Exchange.
The Value Fund Shares are currently listed on the Barbados Stock Exchange and the Trinidad and Tobago Stock Exchange and the believes that cross-listing the Value Fund Shares on the Jamaica Stock Exchange will enhance liquidity and make them available to wider universe of investors.
The Board of Directors has authorized ECPF’s fund managers, Eppley Fund Managers Limited, to evaluate the process of cross-listing the Value Fund Shares with the support of ECPF’s attorneys, investment bankers and other professional advisors.
If a decision is made by the Board of Directors to cross list the Value Fund Shares, Eppley expects that the cross-listing is likely to take place by the end of the second quarter of 2019 subject to any relevant regulatory approvals.
Eppley Caribbean Property Fund SCC (“ECPF”) is a closed-end mutual fund that invests in real estate across the Caribbean. ECPF has two segregated cells, namely the Value Fund and the Development Fund both of which are listed on the Barbados Stock Exchange and the Trinidad & Tobago Stock Exchange
Jamaican Government cuts transfer tax to 2%
Effective April will government will reduce transfer tax from 5 percent to 2 percent, the Minister of Finance Dr. Nigel Clarke told Parliament, in his maiden budget presentation.
The minimum business tax for all businesses and asset taxes for non-financial businesses will be abolished effective April. The taxes were a nuisance and discriminatory in nature, lacking equity as they did not equate to the size of all businesses in the country, resulting in smaller businesses bearing a larger burden than larger ones.
The threshold for filing GCT will be moved from $3 million to $10 million, a level below which no GCT return will have to be filed. The minister stated that the change will result in 3,000 businesses not having to file GCT returns.
Stamp duties relating to certain transactions will be removed and substituted by a simple fee of $5,000, equal to the cost of providing the service. They will also abolish ad valorem stamp duties and replace them with a flat fee of $5,000.
Anya Levy of ReMax Elite Realtors
The amount on which estate tax is payable, will move from $1 million to $10 million effective April. The Minister stated that the measures will result in $14 billion in taxes being given up, by the government.
The minister also stated that the primary surplus will be lowered from 7 percent of GDP to 6.5 percent and was arrived at in discussion with an IMF staff.
IC Insider .com spoke to two noted individuals within the real estate market who are positively impacted by the news on stamp duty and transfer tax reduction. Deborah Cumming of Century 21 said “that is fantastic news, it will make a tremendous difference to the industry and the economy.” While Anya Levy associate broker at ReMax Elite. “that is fantastic, it will give incentive for sellers to move their properties and increase volume. It’s the right move and government will make up the taxes given up by increased volumes.”
Banks love Turks & Caicos most
Turks & Caicos Islands is the destination by far, that banks and non-banks are most bullish about, according to data disclosed by the KPMG Carib Tourism 2018 survey.
Following Turks & Caicos, the financiers were bullish on Cayman Islands, then Jamaica, Antigua and Barbuda with Bermuda in fifth spot.
“When we looked at which destination in the Caribbean financiers are most bullish about there were 16 different destinations put forward of which only 7 were nominated by both bank and non-banks,” KPMG said. KPMG went on to state,”this further corroborates the position seen in recent years that the financing landscape has changed and that the new landscape involves financiers favoring a small number of jurisdictions for whatever reason rather than financing projects across the entire region”
The survey stated that airlift was the number one factor that considered important followed by ability to recover for hurricanes speedily.
“For banks the second most important issues were the ability to recover from hurricanes (88 percent) and outdated infrastructure (88 percent). Non-banks were unanimous (100 percent) in terms of the importance of crime and the ability to recover from hurricanes.”
