Jamaican market loses $9.3b of value in two days - Down $83.6b since September

Published: Wednesday October 8, 2008

Skittish investors continued to brace against the markets yesterday, slicing another $3.3 billion off the value of stocks, and increasing to $9.3 billion the value they have lopped off listed firms in the week's first two trading days on the Jamaica Stock Exchange (JSE).

In fact, with market capitalisation ending the day at $732.04 billion, the JSE has lost $83.6 billion of its value since the start of September.

Last week, the market shed $30 billion of value and more than 4,000 points off the main index.

Brokers have, for the most part, declined to comment on the retreat, but those who did suggest that it is related to uneasiness over the global credit crisis and an increasing unwillingness to take risk.

"There appears that we are beginning to see a slowdown in the decline of values," said one analyst last night. "But I'd say there is a clear mood of uncertainty."

Major indices

The Jamaican market's descent has pushed the JSE to an 11-month low, but its performance tracks with major indices in the region and across the world.

The United States (US) markets have lost US$2.2 trillion in October (See story on Page C4), while Brazil despite a strong economy has led the fall in Latin America stocks.

Brazil's Ibovespa index lost 9.8 per cent in two days while its currency is down to 2.3 reals to the US dollar.

Mexico's IPC index meanwhile slipped four per cent, Chile's IPSA index fell 4.3 per cent, Colombia's IGBC dropped 0.8 per cent, and Argentina's Merval closed down 2.7 per cent.

"This financial crisis has become a crisis of confidence," said Fernando Montaner, an analyst at Fit Research SA in Santiago, Chile in an Associated Press news report.

Investors, apparently, have been concerned whether local financial firms particularly have been subject to contagion from toxic assets held by American financial houses that have tumbled in the wake of the subprime mortgage problem.

However, most listed firms here, in filings to the JSE, have said that the faced little exposure and that any exposure would have almost no material impact on their businesses.

Global recession

Regulators have echoed the line.

Analysts suggested that the broader fear is for a decline in the economy, set off by an expected global recession, which would hurt profitability of listed firms.

"People are not rushing to buy," said one last night. "There is a wait-and-see attitude rather than a rush from the market with a made sell off."

But in the face of that retreat and falling stock prices, brokerages have began to sell to clients that the time was right to shop for bargains.

Strong prospect

GraceKennedy which fell to $61 was called a strong prospect - the stock has traded as high as $120 but was hovering at $70 to $80 before the current market slide.

Jamaica Broilers was also touted as a buy.

During yesterday's session, the main JSE index declined 432 point, or 0.44 per cent, to close at 98,070.59. On the day 25 stocks traded, with four advancing, five declining and 16 trading firm.

Significantly, most financial sector equities were firm, with the day's only gainer from this sector being Scotia DBG Investments, up $1 to $24.

JMMB 12.25 per cent preference share was down five cents at $2.55.

The days big loser was GraceKennedy Ltd, which was down $8.49 or 12 per cent to $61.50 - a decline that helped to drag down the market.

In the last few weeks, financial firms have been the loss leaders. The reporting of limited to nil exposure to US financial firms in trouble has settled the market somewhat.


Source:
Sabrina Gordon
Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20081008/business/business6.html
sabrina.gordon@gleanerjm.com.