The Jamaica Stock Exchange. - WINSTON SILL/FREELANCE PHOTOGRAPHER
BARBADOS NATION:
INVESTOR CAUTION, high oil prices and 'profit taking' are some of reasons behind the continued slump of the three major regional stock markets.
This is in the opinion of Marlon Yarde, general manager of the Barbados Stock Exchange (BSE), and William Swamy, acting general manager of CMMB (Barbados) Ltd.
Speaking last Monday evening at a BSE seminar in the Grand Salle of the Tom Adams Financial Centre on the truths and myths of investing, Yarde revealed the BSE's results for the first quarter of this year were marginally down compared with the last quarter of 2005.
While the difference between the number of trades on the local, cross-listed and composite indices varied by less than one per cent, this still translated to a decline in market capitalisation of the three by approximately US$20.8 million, US$2 million, and US$22.34 million, respectively.
'FLAT' RESULTS
However, Swamy noted in his presentation that despite its relatively 'flat' results, the BSE continued its trend from last year, still outperforming the Jamaica and Trinidad and Tobago stock markets.
Comparing the performances of the three stock markets from January 1 to the last trading day of the week before his presentation, Swamy illustrated that the BSE showed an overall 0.16 per cent decline, in contrast to the 19.8 per cent decline of the Jamaica Stock Exchange (JSE) and the 25.3 per cent decline of the Trinidad and Tobago exchange.
Both Yarde and Swamy suggested investors were still in a 'wait-and-see mode', given the wide-ranging impact of rising oil prices on regional companies and economies.
They also suggested investors were looking to capitalise on the gains made during the bull run from 2002 to 2004 when the exchanges saw double-digit and triple-digit percentage growth.
'PROFIT TAKING'
Swamy told the BARBADOS BUSINESS AUTHORITY this 'profit taking' was especially having an impact on the JSE.
He pointed out the decline of the JSE was a unique situation, given that interest rates were down; yet the stock market was also down, in contrast to Barbados where high interest rates on savings instruments were among the challenges faced by the BSE.
He said some investors took the opportunity to cash in stock and reinvest in the initial public offerings and rights issues seen in Jamaica last year.
He added that Cricket World Cup 2007 should also be factored in as shareholders throughout the region cashed in stocks to finance renovations and construction.
