This week's delisting of Barbados-based Sagicor Financial Corporation (SFC) from the Jamaica Stock Exchange (JSE) could translate to a significant depreciation of up to 40 per cent in the portfolio value of investors holding the stock, one analyst has said, even as JSE spokespersons express concern that other foreign firms could quit the Jamaican equities market.

"Clients currently holding the stock have the option of selling in Trinidad or Barbados where it traded at TT$11.11 or BDS$3.55, respectively, on September 14. This is expected to generate a loss of between 40.09 per cent and 25.06 per cent - gains from dividends excluded - if clients who had acquired this stock on our local market since it was listed in 2008 were to sell these in Trinidad or Barbados," Tyrone Brown, research analyst at Barita Investments Limited, told the Financial Gleaner this week.

The stock is believed to be held largely by corporate clients.

Sagicor Financial, one of the region's oldest insurance companies, on September 4 announced its decision to delist from the Jamaica Stock Exchange, citing insignificant trading activity in the company's shares. The delisting took effect on Wednesday.

The shares last traded at $260 in January, up $15.89 from its $244.11 price when it was first cross-listed in June last year, joining its local subsidiaries, Sagicor Life Jamaica and Pan Caribbean Financial Services.

July trade

Its highest traded volume was recorded at 501,000 in July last year.

"The JSE was disappointed by Sagicor Financial's decision to delist, having been on the exchange for just over one year," Marlene Street-Forrest, the JSE general manager, said this week.

There is some concern in the market, she noted, that other listed foreign companies may follow.

The management of the exchange says talks will be held with the leadership of other cross-listed firms to ascertain their thinking.

"It all depends on the value added that they see from continuing to list on the exchange," said Street-Forrest.

The Barita analyst agrees.

SFC, which operates in the life, property and casualty insurance market, as well as in banking, asset management and property development, is one of four foreign companies listed on the Jamaica Stock Exchange.

The others are FirstCaribbean International Bank, Guardian Holdings Limited and Trinidad Cement Limited.

Barita's Brown speculates that there is more reason to believe FirstCaribbean Jamaica, rather than its Barbadian parent, could delist, but did not elaborate on this scenario.

The analyst is of the view that Guardian may place a high value on its presence in the Jamaican equities market, though he is not so convinced about Trinidad Cement.

"Trinidad Cement doesn't really have active operations here, although there is Carib Cement."

Another market expert, Johann Heaven, vice-president of Scotia DBG Investments, said the cost of listing may be a factor in any decision by these firms.

"I don't expect any other foreign companies to delist from the JSE, although it may be something they may consider, especially given the ongoing costs of being listed. Most companies are currently looking to cut costs wherever they can."

Annual listing fees

It costs a company such as Sagicor Financial, with market capitalisation of over $10 billion, $1.4 million in annual listing fees. There are supplemental fees and the cost of human resources necessary to meet JSE reporting requirements, which listed companies also bear.

The JSE's Street-Forrest concedes that the Jamaican exchange's reporting requirements are far more rigorous than other exchanges in the region, an issue she said Sagicor Financial raised with the exchange in coming to its decision to delist.

The JSE requires quarterly submission of financials within 45 days of the close of each three-month period and the audited annual financials within 60 days of year end.

"We are encouraging our regional partners to adopt the JSE model for the benefit of the market and in respect to harmonisation," the JSE manager recommended.