NCB Capital assesses JSE market

September 21, 2017 by

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.

Filed Under: JSE Combined, Stock Market Tagged With: ,

JSE index up 8,700 points – Monday morning

September 18, 2017 by

In a moderate trading session on the main market of the Jamaica Stock Exchange on Monday the market index recovered almost all of the huge amount in excess of 10,000 points it lost of Friday.
After an hour of trading at 10:30 this morning, the All Jamaica Composite index rose 9,567.14 points to 286,516.50, the JSE main index was up 8,716.75 to 261,048.95, the Composite Index surged 8,138.33 points to 273,201.83 and the Junior Market index rose 9.87 points to 3,044.93.
Carreras traded ex split with 46,723 shares changing hands at $10.80. JMMB Group was trading at an intraday high of $23 but with just 8,968 units. NCB Financial had just 100 units changing hands, back at the $90 it traded at ahead of the pull down in price in the last few moments of trading, on Friday. The stock is offered currently at $88 with 1,460 units on offer, with the bid at $85.01 to buy 1,200 units. Scotia Group traded 680 units at $48, up from the $45.05 it ended at on Friday.

Filed Under: Company News Tagged With: ,

Critical trend investors must watch

September 17, 2017 by

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.

Filed Under: Feature Stories, JSE Combined, Stock Market Tagged With:

Watch their money not their words

April 30, 2016 by

Natalia Gobin-Gunter Chairman and Deputy Managing director inserting name strip to indicate listing of Key Insurance on the junior market.

Natalia Gobin-Gunter Chairman and Deputy Managing director inserting name strip to indicate listing of Key Insurance on the junior market.

Bank of Jamaica’s survey findings of perceptions of Present and Future Business Conditions in Jamaica reached the second highest levels in February 2016, since its inception in 2005. The data shows up the disparity of in how business executives think and what they do reflecting the real world, experience of a gulf between what people say they will do and what they in fact do. In the 2015 elections in Trinidad, 74 percent of voters indicated they were going to vote but 66.84 percent finally turned out to do so, while in Jamaica, pollsters said between 59 and 62 percent of the electorate were going to vote and only 48 percent did.
The survey findings of carried out amongst Jamaica’s business executives, show wild swings in their views on current conditions since the start of the data in 2005, while the index of future business conditions was far more predictive of actual business developments. The attached chart shows this up quite clearly. Other findings of the survey also points out that the top management of the various companies were was off the mark when it came to inflation, interest rates and the rate of exchange of the local dollar. One of the clearest measures to test what the executives say and do, is a comparison of the sentiments on business conditions and the performance of the stock market.
When it came time for the business community to put their money where their mouth is, it turned out to be vastly different from what they were saying in the Business Condition Survey. One measure of the business community’s bet on the future, is shown in the attached graph. The graph shows future expectations are is much more aligned with future business conditions than with current ones.
Grph BCon-stks 02-16What the business sector did, reflected itself in a much smoother monthly movement than what they said about the future. When it comes to money, the stock market reflects what people are doing with their money as opposed to what they say. The chart shows the movement in the all Jamaica Composite Index, plotted against the two business surveys published by the country’s central bank.
The movement of the stock market seems a better predictor of future expectations, than the surveys, as shown by the smoother movement of the stock market compared with the sentiments data. What is also true, is that the future expectations and the stock market movements are fairly closely aligned with each other.

Filed Under: Economy, Feature Stories, JSE Main Market, Stock Market Tagged With: , , , ,

Friday’s 7,697 points gain highest on record

October 10, 2015 by

The 7,697.11 points jump in the all Jamaican Composite index on the Jamaica Stock Exchange on Friday October 9 is the largest by far in the history of the JSE, beating the 5,788.68 gain on the 5th of April 2004.
Record gain -10-15Friday’s move pushed the all Jamaican Composite index to 118,154.30 points the highest level in just under 11 years, still more than 20,700 points from the all-time high of 138,917.59 reached on 24th of January 2005. The slump after the 2005 high is the longest, since the ten years decline between May 1972 and June 1981 when the market failed to exceed the then highest level reached in 1972.
While the jump on Friday is by far the largest daily gain, it pales in comparison to the drop on 13th of April 2004 of 9,295.39 points that pulled the index down to 94,329.90.
The highest daily gains and losses in the all-Jamaica Composite index of the JSE are indicated in the table.

Filed Under: JSE Main Market, Stock Market Tagged With: