RJRGLEANER Honour Awards 2019 | A dominant force in the global market

Recipient: Jamaica Stock Exchange

Category: Business

The market value of the companies on the Jamaica Stock Exchange (JSE) hit J$2.0 trillion at the end of 2019, which now equals the size of the entire Jamaican economy.

Ten years ago, the economy was twice the size of the JSE market. This indicates the rapid rise of the local market orchestrated by the Jamaica Stock Exchange.

For 2020, the JSE expects increased transactions and listings which should push the market even higher. This year-on-year growth, particularly over the last five years, led the market to lead the world twice as the best-performing stock exchange globally.

“I am expecting a very active year with listings from the private and public sector,” said head of the JSE, Marlene Street Forrest.

The association, between the market value and the size of the economy, while less utilised as a measure locally, finds currency in other markets. Generally, the market is viewed as bullish and slightly overvalued as it surpasses the value of the economy.

“I am not expecting slower growth in market capitalisation,” added Street Forrest.

The Jamaica Stock Exchange was incorporated in 1968 and started operations in 1969. It initially operated from within the Bank of Jamaica building and moved to Harbour Street in 1998.

The JSE ranked as the fourth best-performing stock exchange in the world in 2019. It also led the world twice over the last five years. During 2019, eleven stocks made gains above 100 per cent, and the market racked up a new record, having topped 500,000 points for the first time.

In addition to the triple-digit performers, more than 20 stocks made gains above 10 per cent.

NEW COMPANY LISTINGS

In 2019, the main market increased by more than 120,000 points or 34 per cent, to close the year at 509,916 points; the junior market closed up 3.15 per cent at 3,246 points; and the USD Index gained nearly 42 per cent to close at 226 points.

The 2019 growth of the market was aided by the continuation of the low interest rates regime. The low rates continued to entice private capital away from government paper to the higher returns in the stock market.

On the listing side, entities were more interested in raising funds above $1 billion or beyond the Junior Market tax break threshold of $500 million.

In previous years, the Junior Market was all the rave, as companies oftentimes avoided listing on the Main Market. The JSE accepted Access Financial Services Limited as its first Junior Market listing on October 2009. It eventually led to a raft of new company listings.

Currently, the JSE combined market comprises more than 90 listed and cross-listed ordinary stocks, and about two dozen preference stock listings. The stocks are evenly split between the Main Market and the Junior Market.

Last year’s level of activity served to push stock market wealth, as measured by market capitalisation, above $2.1 trillion as at December 31, more than $1.9 billion of which resides in main market stocks, and $151 billion in junior stocks.

Statistical Institute of Jamaica’s latest figures estimate the size of the economy as J$2.0 trillion.

Ten years ago, the JSE market capitalisation stood at $544 billion, according to the JSE data, and the GDP stood at US$12 billion or $1 trillion, according to World Bank data. The local currency traded at the $89.59 to US$1 in January 2010 at the time.

INTERESTING FACTS

- The Jamaica Stock Exchange started in the Bank of Jamaica building.

- The JSE ranked 4th among 94 exchanges in 2019 in terms of gains.

- Jamaica now uses the Nasdaq platform.

- The Jamaica Stock Exchange is a privately-owned, limited liability company and not a State entity.

- The JSE launched its social exchange platform for raising funds for charities in 2019.

BUCKET LIST

- The Jamaica Stock Exchange made commitments to implement block chain technology.

- JSE will consider allowing short selling or profiting from a declining stock.

- JSE and other regional exchanges are to merge certain activities over time.

- JSE plans to launch a Micro Stock Exchange for small businesses.