Susan Gordon, Business Reporter

John Jackson - file

John Jackson likes to tell his audiences that predicting the behaviour of the Jamaica Stock Exchange is risky business. The exchange can be highly unpredictable.

Yet, at the start of each year, Jackson, a chartered accountant, market analyst and publisher, pushes his head out, prognosticating not only on the movement in the market indices, but the likely trends in individual stocks.

Indeed, he was at it again last week, at his annual investment seminar, projecting that the market, whose main Jamaica Stock Exchange (JSE) Index closed last year at 106,968.06, up 6.75 per cent, will gain at least 50 per cent in 2008.

"I would hazard a guess, based on the technical information, that the market is going to break the all-time high it reached in 2005," Jackson said.

In fact, following a two-thirds rise in 2004, when the JSE index ended at 112,655.51, the market reached a peak in April of the following year, with the index topping 119,179 points. It thereafter retreated, to end the year more than seven per cent down at 104,504.38.

Caveats and qualifiers

While Jackson is confident of a strong performance in the equities market this year, there are caveats and qualifiers.

On the positive side, there has been a post-election buoyancy in the economy, and strong loan growth by banks point to investment and consumption.

The potential upshot of this is growth beyond last year's two per cent, when the economy was impacted negatively by pre-election blues, hurricane and flood rains.

"But there are some dark clouds on the horizon," Jackson told Wednesday Business in the aftermath of his seminar, held under the banner of his Investor's Choice magazine. "There are potential issues with the balance of payments and the government deficit (projected at 5.5 per cent of GDP for the current fiscal year, which could impact negatively on the economy. So, much could depend on how much stability there is in the economy."

But even at that, Jackson still feels that the fundamental of traded firms are right for a broad growth in stock prices this years.

For instance, the market last traded at an average price/earning (PE) ratio of 15, based on 2006 earnings, and at a PE of nine, based on estimated 2007 earnings.

"If '07 is better than '06," Jackson said, "I expect the PE and the move should be applied rationally. That should give a 50 per cent movement in the market, on a broad basis."

Investor's Choice Top 10 stock picks for 2008

Palace Amusement

Pulse Investments

Cable and Wireless (CWJ)

Life of Jamaica (LoJ)

Jamaica Broilers Group(JBG)

Dehring Bunting and Golding (DB&G)

First Jamaica Investment

Seprod

GraceKennedy Limited

National Commercial Bank (NCB)

The expected laggards

Pegasus

Jamaica Producers Group

Capital and Credit Merchant Bank

The Gleaner Company

FirstCaribbean International Bank Jamaica (FCIBJ)

Jamaica Livestock Association

Supreme Ventures Limited

Mayberry Investments Limited

Dyoll

Kingston Wharves