Apartment complex in Kingston – Real estate values to benefit from low interest rates.
Declining interest rate is a huge buy signal for both stocks and real estate investments. If the decline in rates is expected to be prolonged then investors will swicth their investments to take advantage of opportunities elsewhere.
Last year this publication boldly advise readers that the drop in interest rates by the central bank was a huge buy signal for stocks and that investors should be piling into stocks and real estate. Some were skeptical, clearly unaware that there are really two major factors driving stock prices – interest rates and profits. Interest rates have fallen to the lowest levels on record, in Jamaica.
Many who consider the present values of stock to be ioverpriced not factoring the major cahnge the falling rates will have on valuations of both stocks and real estate. A few companies may overpriced currently, but not the vast majority. The incredibly low interest rates being enjoyed by many Jaamicans are not about to change substantially, any time soon. While the low rate of 1.7 percent on treasury bills reached in 2018 won’t last forever, it is expected that it will not go up too far from current levels of just over 2 percent, any time soon.
In May last year, Bank of Jamaica cut the overnight policy rate, by 25 basis points to 2.5 percent that along with a decline in short term Treasury bill rates at the same time.
IC Insider.com stated then, that the moves provided more ammunition for a big surge for Jamaican stocks. The piece went on to state that with a 15 percent fall in BOJ’s policy rate in 2018 so far, stocks are lagging behind, with an increase of just 6.6 percent for the Junior Market and 4 percent for the main market.
The fall in Treasury bill rates was far greater than the rise of the All Jamaica Composite Index, an indication of a lot more upside for stocks based on the downward movement of interest rates.
Investors seem then to be focusing more on profits in valuing stocks than on interest rates so far. That will change the article suggested. The fall in the overnight rate at that time, translated to a 9 percent rise in stock market prices, but rates seem likely to decline some more before settling off, providing more ammunition for greater gains in stock prices.
We stated that with the fall in interest rates, the PE of money is at the high end 40 times income and using corporate bond rates around 12 times, but the PE ratio should be more tied to Treasury Bill rates and that PE is now in 30 range but stocks are mostly in the low teens and below. IC Insider.com further stated that most investors did not appear to be paying much attention to the tsunami that was on the way that will see prices move sharply higher.
With just over five months of 2018 passing, investors have not only warmed to the fall in rates but many are not willing to part with their stocks. Late comers to the party will pay much higher prices than in May and June. Then the Junior Market was up 24 percent and the Main market 31.7 percent and rising. Technical reading of the market suggest that the Main market has another 25 percent run to make before probably cooling for a charge to 720,000 points on the All Jamaica Composite Index in 2019.
The fall in interest rates makes it cheaper to buy real estate with lower interest rates for each dollar borrowed. Additionally, investors will switch funds from fixed interest investments into stocks and real estate thus driving up their values.
Note that this is an updated version of an article posted last year after Bank of Jamaica cut their overnight policy rate.
Honey Bun concluded trading after gaining 2 cents to $5.02, with 8,892 shares, Iron Rock finished at $2.95, with 10,000 shares, Jetcon Corporation added 2 cents to close at $4.05, with 659 units, Lasco Distributors concluded trading 5 cents higher at $4.15, with 243,625 stock units. Lasco Financial rose 1 cent to $5, with 5,000 units, Lasco Manufacturing closed after rising 10 cents to end at $4.20, with 12,911,850 shares, Main Event ended trading $1 higher at $7, with 31,441 shares, Stationery and Office closed with a loss of 40 cents at $7.60, with 41,094 units and tTech concluded trading 70 cents higher at $6, with 3,100 shares. In the junior market preference segment, Eppley 9% finished $6 higher at $6, with 6,000 shares changing hands.
Trading ended with an average of 60,999 units for an average of $329,982 in contrast to 70,911 units for an average of $407,120 on Tuesday. The average volume and value for the month to date, amounts to 166,085 units valued at $802,331 and previously 135,539 units valued at $711,179. May closed with an average of 217,589 units, valued at $1,322,452 for each security traded.
General Accident finished trading with a loss of 28 cents at $2.70, exchanging 78,444 shares, GWest Corporation closed 5 cents higher at $2.30, with 2,000 stock units. Honey Bun ended at $5, with 5,000 units, Jamaican Teas settled with a loss of 5 cents at $5.95, after 18,000 shares traded, Jetcon Corporation ended trading 659,115 stock units and lost 12 cents in closing at $4.03, Knutsford Express closed with a loss of 1 cent at $11.50, exchanging 50,000 shares. Lasco Distributors fell 10 cents to $4.10, with 111,599 shares, Lasco Financial concluded trading with a loss of 1 cent at $4.99, while 89,621 stock units were exchanged, Lasco Manufacturing finished at $4.10, with 47,145 units, Main Event settled with a loss of $1 at $6, with 58,500 shares. Paramount Trading closed at $2.90, with 7,275 shares, Stationery and Office finished trading $1.15 higher at $8, with just 500 stock units changing hands and tTech ended at $5.30, with 9,000 shares changing hands.
At the close of market activity 6,395,222 units valued at $50,487,361 traded compared to 3,061,341 units valued at over $40,934,808 changed hands, on Monday.
For the month to date 195,519 units traded with an average value of $6,383,337 and on the previous day 203,633 units traded with an average value of $6,596,529 on average. May closed with an average of 589,414 shares with a value of $16,532.367, for each security traded.
May closed with an average of 217,589 units, valued at $1,322,452 for each security traded.
KLE Group closed with a loss of 25 cents at $2.70, while trading 29,500 shares, Knutsford Express ended 50 cents higher at $12.50, with 5,389 shares changing hands, Lasco Distributors concluded trading at $4.20, with 198,580 stock units, Lasco Financial finished with a loss of 10 cents at $5, with 37,301 units. Lasco Manufacturing settled with a loss of 10 cents at $4.10, with 30,000 shares, Main Event ended trading 7,050 shares at $7, Medical Disposables traded 1,500 shares 25 cents higher at $5, Paramount Trading finished trading with a loss of 10 cents at $2.90, with 2,197 stock units and Stationery and Office closed with a loss of 90 cents at $6.85, with 572,850 units changing hands.
The Junior Market of the Jamaica Stock Exchange, recovered more of the losses suffered last week as stocks rising was just ahead of those falling. 
Trading ended with an average of 15,159 units for an average of $67,269 in contrast to 109,180 units for an average of $508,603 on Friday. The average volume and value for the month to date, ends at 140,805 units valued at $735,954 and previously 151,951 units valued at $795,273. May closed with an average of 217,589 units, valued at $1,322,452 for each security traded.
GWest Corporation ended 3 cents higher at $2.25, with 23,782 units, Honey Bun concluded trading at $5, trading 28,808 shares, Jamaican Teas ended trading at $5.50, with 4,124 stock units, after trading at an intraday high of $5.82. KLE Group closed at $2.95, with 7,912 shares, Knutsford Express ended at $12, with 1,900 shares, Lasco Distributors concluded trading with a loss of 5 cents at $4.20, with 39,817 stock units, Lasco Financial fell 10 cents and closed at $5.10, with 34,970 units. Lasco Manufacturing settled at $4.20, with 7,478 shares trading, Main Event ended trading with a loss of 80 cents ot $7, with 7,952 shares, Medical Disposables traded with a loss of 25 cents at $4.75, with 13,903 shares, Paramount Trading finished trading at $3, with 53,715 stock units and Stationery and Office closed at $7.75, with 15,847 units changing hands.
The Jamaica Stock Exchange main market retreated for the second day when trading ended on Thursday with the All Jamaican Composite Index dropping 471.19 points to 333,056.79 while the JSE Index slipped 429.31 points to close at 303,452.35 as declining stocks dominated trading. 
For the month to date 195,519 units traded with an average value of $6,383,337 and on the previous day 203,633 units traded with an average value of $6,596,529 on average. May closed with an average of 589,414 shares with a value of $16,532.367, for each security traded.
The Jamaica Stock Exchange pulled back at the close of trading on Friday as declining stocks was 60 percent more than as those advancing to end a week that had 2 days of new record close and still ended the week 2,561 points ahead of the close of the previous week. 
Sagicor Group settled at $38.15 and lost 95 cents after trading 73,246 shares, Sagicor Real Estate Fund eased 1 cent and settled at $13.79, with 14,201 shares. Scotia Group rose 57 cents in closing trading at $50.60, with 46,014 units, Sterling Investments dropped $2.50 and closed at $9.50, with 591 shares, Supreme Ventures lost 30 cents and ended at $14.20, with 72,325 shares. Victoria Mutual Investments concluded trading with a fall of 10 cents at $4, exchanging 568,164 stock units and Wisynco Group rose 4 cents, finishing at $9.84, with 169,237 units. In the main market preference segment, JMMB Group 7.5% lost 4 cents and finished at $1.04, with 1,000 stock units changing hands.
The Junior Market of the Jamaica Stock Exchange, recovered some of the losses suffered over the previous three days, as advancing stocks out-numbered declining ones on Friday, still leaving the index below the 3,000 mark. 
Trading ended with an average of 109,180 units for an average of $508,603 in contrast to 340,462 units for an average of $1,362,698 on Thursday. The average volume and value for the month to date, amounts to 151,951 units valued at $795,273 and previously 155,908 units valued at $821,793. May closed with an average of 217,589 units, valued at $1,322,452 for each security traded.
Jamaican Teas finished trading at $5.50, with 174,438 units, Jetcon Corporation closed 10 cents higher at $4.10, with 9,464 shares, Knutsford Express traded 25 cents higher at $12, with 100 units, Lasco Distributors rose 5 cents to $4.25, with 135,635 shares, Lasco Financial closed with a gain of 15 cents at $5, trading 78,477 shares. Lasco Manufacturing ended with 1,192,669 shares trading at $4.20, Main Event concluded trading 30 cents higher at $7.80, with 30,500 stock units, Medical Disposables finished with a loss of 10 cents at $5, trading 126,888 units, Paramount Trading settled at $3, with 3,179 shares changing hands and Stationery and Office ended trading at $7.75, with 12,926 shares. In the junior market preference segment, Eppley 8.25% finished trading at $6, with 293,200 shares changing hands.
