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An aerial view of New Kingston, Jamaica. (Photo: wikicommons)

$89 billion maturing JDX bonds to provide liquidity for Jamaica stock market

An aerial view of New Kingston, Jamaica. (Photo: wikicommons)

  • Market to remain bullish in 2020

The local stock market is expected to benefit from the infusion of capital that is to come from the $89 billion in bonds that will be maturing by October this year.

The JMMB Elevate 2.0 financial seminar held last weekend.
(Photo: Caribbean Business Report)

That’s the assessment from Jamaica Money Market Brokers (JMMB) Investment experts, Peter Thompson and Greig Lindo, who made out a case that the Jamaican stock market will remain bullish in 2020. This is particularly so because of the low interest rate cycle that Jamaica is going through plus the numerous companies that are coming to the market in 2020 including TransJamaica Highway, which is expected to offload the biggest IPO in Jamaica’s history.

Speaking on the weekend at the JMMB financial empowerment event series titled, JMMB Elevate 2.0, Lindo argued that most of the $89 billion worth of government bonds maturing in October this year should find itself in the stock market. He explained that the maturing bonds were invested in the Jamaica Debt Exchange programme (JDX).

“Many companies going the way of IPO but not all IPO are equal. In 2020 you can lose money in the equities market so in order to make money, you have to do the research.”

– JMMB Investment expert Peter Thompson

Citing as his reasons for believing that a large portion of the liquidity from the JDX will end up in the stock market, Lindo pointed to the low interest rates on the bonds and money market as the drivers for pulling liquidity to the stock market. According to Lindo, the stock market is showing even more interest among local investors, particularly given the companies that will be coming to the market

Lindo cited the main market of the stock exchange, where most of the growth has been coming from while highlighting the potential for even greater growth in the junior market. He said the JSE grew by 33 per cent over the last four years of which the junior market contributed 18 per cent over the period with the potential for even a bigger growth this year.

The TransJamaica IPO is expected to be the largest ever in Jamaica.

“The stock market has been growing particularly over the last four years peaking in August 2019 but the main index has been down since then. Looking forward growth is going to be difficult but the equities market has some juice to achieve growth in 2020,” Lindo reasoned.

According to Thompson, the phenomenal growth experienced over the last four years will be “normalised” while cautioning about investing in the equities market without proper due diligence and research.  The JMMB investment expert made the point that it will be even more difficult in making money on the equities market this year but emphasized that money can be made given proper due diligence and research.  

The Jamaica Stock Exchange

“Many companies going the way of IPO but not all IPO are equal,” reasoned Thompson explaining that not all IPO will make investors money. “In 2020 you can lose money in the equities market so in order to make money, you have to do the research,” Thompson cautioned.  

He pointed to the many opportunities in the various classes of assets such bonds, equities, money market but worldwide equities is where the most money is made from these days because of falling interest rates internationally. Thompson explained that some countries are now offering negative interest rates on investments.

An attendee at JMMB Elevate 2.0 asks a question during the financial seminar.

JMMB Elevate 2.0 is a part of JMMB’s goal-getter series, held from January 17-18. The 2-day event kicked start with an after-work session, Learn & Vibe on January 17 at 7:00PM during which the speakers will delve into wealth creation opportunities and speak to major financial trends that impacted 2019, in anticipation of what’s likely ahead in 2020.

The overarching aim of the event is to encourage and empower individuals to be more intentional about their financial goal achievement; take actionable steps, like opening an account or starting their financial planning conversation on the spot, if they desire, as a first step towards achieving their dreams and create a plan that will guide them to achieving their goals.