PE ratios continue to rise

Treasury bills rates bottomed and have moved back closer in line with the Bank of Jamaica’s overnight rate of 2 percent.
IC Insider.com is forecasting a further increase in T-bill rates to move above 2 percent, this could happen with the December Treasury bill auction.
In the mean time the main market of the Jamaica Stock Exchange has moved on the new record highs, with NCB Financial being the primary mover with the stock closing at $159.05 on Friday. The Junior Market that peaked at an all-time high in October has pulled back with no new price sensitive news to encourage aggressive buying.
The above developments are happening as the PE ratio of the market continues to inch higher. The ratio climbed slowly until June but moved much sharper thereafter, to better reflect the sharp fall in interest rates. The recent inching up of Treasury bill rates appears to have slowed the upward movement in the average PE ratio of the over all market that sits just under 16 currently. The average PE is now ahead of the longer term trend that goes back to 2013, but well below the trend, from late 2015 that suggests that the average PE is headed for 18, that will require a 15 percent rise in stock prices to get there. December is usually a bullish month and so the PE of 18 may be reached by year end or early in 2019.