Junior Market beating Main Market again

Back in 2018, the Jamaica Stock Exchange Junior and the Main Markets were trading around 18 times the current year’s earnings towards the end of the year, they parted company since, with the Junior market now at nine and the Main Market at 14 times current year’ earnings.
The Junior Market index outperformed the Main Market index by a wide margin between 2011 and 2016, with gains of 583 percent to 160 percent for the Main Market. The Junior Market annual movements exceeded that of the Main Market, by significant margins, except on two occasions when the Main Market edged out the Junior Market. In 2012, the Main Market beat the Junior Market stocks by two percentage points and 12 percentage points in 2014. In 2011, when the Main Market rose 26 percent, the Junior Market jumped 97 percent in the formative years of the market, with twelve listings by the end of 2011 compared to just one at the end of 2010. The gains in 2011 came from new listings, as Access Financial Services, the only stock listed in 2010, ended at $4.70 in 2011 from $5 at the end of 2010 from an IPO adjusted price of $1.834 after a 10 for one stock split.
The Junior Market performance after 2016 was moderate as investors focused attention on the more established companies on the Main Market as interest rates on Treasury bill started falling below seven percent. Notwithstanding the pick outperformance of the market for emerging companies by the more mature market after 2016, the former was still able the beat the latter between 2010 and 2020, with the Juniors outperforming with gains of 588 percent to 415 percent.
The Junior Market fell sharper than the Main Market in the market met down in March this year. Yet, the Junior Market recovered faster than the Main Market and is now ahead with gains since that erased year to date losses to 22 percent up to last Friday, compared to a fall of 26 percent for the Main Market. In the past four weeks, the Junior Market continues to outperform the Main Market. With Junior Market stocks enjoying PE ratio that is far less than the Main Market stocks, the odds favour the newer business entities doing better than the older, more matured ones until the gap is closed.