Caribbean stock market half-year report

Caribbean stocks ended the first six months of 2011 higher on the back of large gains on the junior market as well as solid gains among financial, retail and distribution, manufacturing and conglomerate stocks.

For the half-year, 713,299,952 shares valued at US$256,713,483, crossed the floors of the six stock exchanges across CARICOM, with 75 stocks advancing, 37 declining and 11 remaining unchanged. Cable and Wireless Jamaica was the volume leader with 196,790,515 shares being traded, Ciboney Limited posted the largest gain for the period of 216.6 per cent, while on the losing end, Cable and Wireless Jamaica fell 74.7 per cent.

Some 11 of the CSX 30 stocks advanced, nine declined and 10 were unchanged. The CSX 30 gained 105.40 points to close the period at 1,235.20, up 8.89 per cent year to date.

On the junior market, seven stocks advanced, three declined and one was unchanged as the CJSX advanced 326.90 points to close the period at 1,388, up 18.65 per cent year to date. The CJSX was led by Lasco Distributors which posted a gain of 70.92 per cent, Lasco Manufacturing gained 37.36 per cent, Dolphin Cove gained of 28.97 per cent, and Blue Power gained 20.2 per cent.

The junior market was boosted by the listing of Honey Bun (1982) Limited. Table 1 provides a summary of the broad market indices for the period as well as some international reference points.

SECTOR ANALYSIS

Financial stocks in CARICOM enjoyed outstanding gains during the first six months of 2011. The CIIX advanced 174.30 points, as 11 insurance and investments stocks advanced, five declined and one was unchanged. The group was led by Pulse Investments which gained 61.6 per cent, Barita Investments 47.1 per cent, Jamaica Money Market Brokers 35.94 per cent, National Enterprises Limited 31.29 per cent, Sagicor Life Jamaica 26.98 per cent, Scotia Investments 18.78 per cent, Guardian Holdings 13.53 per cent and Pan Caribbean Financial Services 13.47 per cent. Doctors Health Services, Mayberry Investments and Insurance Corporation of Barbados bucked the general trend and posted losses of 15.93 per cent, 5.9 per cent and 3.21 per cent, respectively.

The CBSX confirmed the strong performance of stocks in the financial sector by advancing 98 points for the period as 14 banking stocks advanced and eight declined. The group was led by Citizens Bank which gained 42.53 per cent, Bank of Bahamas 37.4 per cent, Capital and Credit Financial Group 29.67 per cent, NCB Jamaica 27.71 per cent, Demerara Bank Limited 27.46 per cent, Republic Bank Guyana 25.13 per cent, Republic Bank Limited 14.5 per cent, Scotia Group Jamaica 13.76 per cent, Bank of Trade and Industry 13.63 per cent, Scotiabank Trinidad 12.82 per cent, and Bank of Nevis 11.34 per cent.

Finance Corporation of The Bahamas, Fidelity Bank Bahamas and Bank of St Kitts and Nevis bucked the general trend among banking stocks and posted losses of 23.96 per cent, 19.37 per cent and 13.36 per cent, respectively.

Retail and distribution, conglomerate, and manufacturing stocks in CARICOM also enjoyed solid gains for the first six months of 2011. The CRDX advanced 130.7 points for the period as seven retail and distribution stocks advanced and three declined. The group was led by S.L. Horsford which gained 57.5 per cent, Prestige Holdings 39.81 per cent, Hardware and Lumber 27.83 per cent, AML Foods 20.18 per cent, Carreras 19.7 per cent and Agostini's 19.1 per cent. Supreme Ventures lost 32.29 per cent for the period and shares in Palace Amusements slid 21.07 per cent.

The CCSX advanced 101.7 points for the period, as eight conglomerate stocks advanced and two declined. The group was led by Neal and Massey which gained 27.59 per cent, Jamaica Producers 15.98 per cent, Pan Jamaican Investments 10.57 per cent and Ansa McAl Trinidad 10.11 per cent. Ansa McAl Barbados declined by 20.61 per cent while Banks Holdings declined by 3.59 per cent.

The CMSX advanced 94.6 points as 17 manufacturing stocks advanced, 10 declined and two were unchanged. The group was led by Berger Paints Jamaica which gained 52.72 per cent, Flavourite Foods 38.45 per cent, Kingston Wharves 32.68 per cent, Angostura Holdings 30.59 per cent, Unilever 14.28 per cent andWest India Tobacco 12.99 per cent.

However, some major names in the manufacturing sector suffered during the first half of the year. Caribbean Cement shareholders saw the company's share price dip by 40 per cent, Salada Food's share price fell by 30.2 per cent, Trinidad Cement's by 27.27 per cent, and Barbados Farms' by 11.65 per cent.

Tourism and real-estate stocks struggled in the first half of the year and the CTRX fell by 73 points as four stocks advanced, three declined and two were unchanged.

While there was a 216 per cent gain for Ciboney and a gain of 18.27 per cent for Montego Freeport, the group was dragged down by a 35.48 per cent drop in Almond Beach Resorts, a 8.14 per cent drop in Pegasus and a 3.88 per cent fall in Kingston Properties. Pegasus is the single largest capitalisation stock in CARICOM, hence a drop in that stock has a significant impact on the index.

There was also weakness in the communications and utilities sector as the CCUX fell 11 points for the period with seven Communications and Utilities stocks advancing, five declining and two remaining unchanged.

Light and Power Holdings posted a 114.17 per cent gain due to the Emera takeover, Dominica Electricity Services gained 28.33 per cent, Radio Jamaica 26.12 per cent, Gleaner 21.31 per cent and Consolidated Water of the Bahamas 10.45 per cent.

However, the CCUX was dragged down by a 74.74 per cent drop in Cable and Wireless Jamaica, a 41.46 per cent decline in One Caribbean Media and a 20.5 per cent decline in Cable Bahamas.

Table 2 provides a summary of the sector indices, followed by details on the performance of the stocks in each sector.

STOCKS ON THE MOVE

Tables three and four provide some widely used financial metrics on the biggest movers for the first six months of the year. Readers should note that prices are in US dollars.

A diversified Caribbean portfolio, such as the CSX 30, continues to outperform well-known international benchmarks such as the S&P 500 and the FTSE 100. Caribbean investors should not let a national focus cause them to miss out on gains in their own backyard.

Prepared by the Department of Management Studies, UWI Cave Hill. justin.robinson@cavehill.uwi.edu.