Dennise Williams, Staff Reporter
MCLEISH
THE LOCAL stock market is likely to do well this year, says Glenford McLeish, managing director of JMMB Securities.
He was speaking at the Jamaica Money Market Brokers (JMMB) 'EconoMix 2005' seminar at the Knutsford Court Hotel on Wednesday. The seminar was concerned with the Jamaican and Trinidadian capital markets.
"Interest rates are historical lows," he said. "Although domestic interest costs consumes 48 per cent of tax
revenues, the 2005/2006 balanced budget will reduce interest costs. The market then expects a narrowing of real return on fixed income investments."
Concerning corporate earnings he said, 'We expect good quarterly earnings to continue. Stock prices ultimately respond to good earnings, but 2005 will be challenging for financial sector stocks."
And finally, there is the mindset of investors. Mr. McLeish said, "We are concerned about the market psychology. One thing is the Dyollisation of the stock market. Will there be further aftershocks? We have to wait and see. And then is there an overabundance of speculation on initial public offerings?"
That said, Mr. McLeish pointed to some stocks that are expected to do well for the rest of 2005.
Pan Jam Investment Trust
Lascelles de Mercado
Caribbean Cement Company
Jamaica Broilers Group
Radio Jamaica Group
First Life Insurance Company
Jason Morris, investment research analyst at JMMB, then spoke about the possible macroeconomic scenarios.
"For the first quarter of 2005, growth as a percentage of gross domestic product could range from one per cent to one point two per cent. For the year, we could see numbers of 3.9 to 4.5 per cent.
"However, for inflation, we have already seen first quarter inflation of 13.2 per cent. The good news is that for the year-end, we could see inflation in the single digit of nine per cent at the low end or at 10.2 per cent at the high end. And interest rates which ended the first quarter of 2005 at 13.5 per cent could go as low 12.2 per cent by year end."
For investors interested in the Trinidad and Tobago Stock Exchange (TTSE), Jwala Rambarran spoke on the outlook for this market.
"We expect a moderate slowdown to returns of 20 to 25 per cent for 2005. And the value sectors in the Trinidadian markets are the following:
Banks such as FirstCaribbean International Bank
Non-bank finance sector such as stocks like Capital and Credit Merchant Bank and Sagicor
The manufacturing sector, specifically looking at Trinidad Cement
The conglomerate sector with stocks such as GraceKennedy.
These sectors are expected to perform well. And Jamaican-based stocks will continue to attract local investors and this interest may in turn attract foreign issuers."
And as strong as the Trinidadian economy is, there are still risks in the economy.
The first is the crime situation. Interestingly, Trinidad isexperien-cing at least one murder a day, and according to Mr. Rambarran, "some feel that we are approaching civil war." At this juncture, a member of the audience shouted, "That's the number we are
working for!"
Mr. Rambarran continued, "Our social fabric remains under strain. The murders and the frequency of kidnapping are affecting business confidence. Many businessmen say they may pack up and do business from Miami."
