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Jamaica's 'obscure' stock market steps into Bloomberg spotlight

Observer writer

Sunday, January 20, 2019

The Jamaican Stock Exchange has caught the eye of the internationally renowned financial media company Bloomberg, which reported on Friday that it is the best-performing stock market in the world. Bloomberg explains that in addition to its performance, what makes this so noteworthy is that the island's stock exchange is also one of the world's most “obscure”.

It reinforces this point by revealing that there are actually no Jamaican stocks currently in US exchange-traded funds but the reason it has out-performed so many other stock exchanges globally is the same reason for its obscurity — it is a very small economy.

According to the article, “It doesn't take much investment to make a tiny market boom and the total value of the 37 stocks in the main Jamaica index is less than US$11 billion, smaller than the valuation of Chipotle Mexican Grill Inc.”

However, it also credits the reinvention of Kingston as a financial hub even in the wake of financial challenges brought on by Jamaica's debt load which the country is striving to diminish.

The world's best-performing stock market, therefore, possesses a certain allure for international investors as Jamaica's main index experienced an upswing of 29 per cent in US dollar terms in 2018.

Some of the challenges to investors, however, include the equity market's tiny size and the fact that fewer shares are available to the public due to majority ownership in companies by conglomerates. Bloomberg also notes that stocks are not being traded often.

However, the article goes on to mention improvements outlined by Marlene Street-Forrest, the exchange's managing director, which include faster trading times and more investment tools currently in use in bigger markets. It also notes that more than 20 new listings are expected this year.

The story from Bloomberg coincided with another article released three days ago by American financial news website Business Insider that reveals how the Bank of Jamaica is using “reggae-inspired” music videos to educate the public on monetary policy. This is a story that has been developing around the world during the month of January, bringing positive attention to the island.

The campaign and its videos bring awareness to the impact of inflation and the bank's efforts to control it.

The videos have rapidly gained international attention on social media catching the eye of Patrick Njoroge, governor of Kenya's Central Bank, who tweeted in early January, “I just love this innovation in central bank communication! No one can stop reggae! Big up @CentralBankJA .”

Natasha Frost, a journalist for international news website Quartz who wrote a story on the campaign three days ago, also tweeted, “It's going to be hard to top this story as my favourite of the year: Jamaica's @CentralBankJA and their reggae-inflected monetary policy.”

The two stories in the global media featuring the Jamaican Stock Exchange and the Bank of Jamaica campaign can only enhance the island's international profile and highlight the many positives of the country's commitment and efforts to improve its economy.

While the Bloomberg feature on the Jamaica Stock Exchange notes that “real growth in Jamaica has averaged less than one per cent the past four years, and it's expected to come in at 1.7 per cent for 2018”, it also mentions corporations that have invested in the country as well as Jiuquan Iron & Steel from China which plans to invest US$6 billion in an industrial park and aluminum refinery.

It notes that the number of Jamaicans who possess brokerage accounts has increased from less than 5 per cent 10 years ago to 10 per cent at the present time.

Perhaps the most positive reinforcement of the progress being made in Jamaica is a quote in Bloomberg from the IMF's Mission Chief for Jamaica, Uma Ramakrishnan, who declares “If I could hold a megaphone and tell investors now's the time, I'd do it.”

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