Investors bullish on productive sector

Wednesday, June 20, 2018

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In last week's trading on the Jamaica Stock Exchange, stocks of companies that directly benefit from the productive sector have found favour with investors.

According to investing guru, John Jackson, “The order book for a number of main market stocks shows buying interest rising. Caribbean Cement with more than 276,000 units on the bid at $40, Grace with bids at $50 and rising with very limited offers, Jamaica Broilers with good bids above $22 and limited offers, JMMB group with bids at $29 against limited offers, Scotia Group with strong bids around the $50 region and limited supply.”

These stocks that cover construction, agriculture, distribution, food and finance are where investors are looking to park their investable funds, perhaps in response to interest rates trending to record lows and the official reports show no inflation in Jamaica.

Again, Jackson observes, “At the latest treasury bill auction, the average rate on the 91 days bill declined to 2.544 per cent from 2.71 per cent at the May auction, while the 182 days instrument average rate dipped to an average of 2.656 per cent from 2.83 per cent for May. The two offerings of $700 million each attracted a total of just over $5.3 billion, an indication of continued high liquidity in the market. The continued fall in rates comes against the background of negative inflation of 0.6 per cent up to April, including deflation of 0.40 per cent in April.”

In the first six months of the year, the All Jamaica Index, which records the movement of stocks on the Jamaica Stock Exchange, has grown by 5.4 per cent, which appears to give stock market investors the edge over fixed-income investors looking for safe government instruments or commercial bank savings accounts which pay on average below 1 per cent per annum before taxes.

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