29th January 2019

North America

The Jamaican Stock market is the most buoyant in the world

The stock market of Jamaica is so removed from the minds of traders that even emerging-markets funds don’t have a presence there. But the fact is, it’s highly active. Things are very different though, investors have just three and a half hours a day to trade and generally things are uncommonly relaxed.

The market is in no way ready to interface with the trading platforms of London and New York etc., and there are no Jamaican stocks in American exchange-traded funds, even those tracking the most emerging countries like Sri Lanka or Kazakhstan. However, returns on Jamaica stock are so appealing they are set to catch the eye of entrepreneurial investors the world over.

Over the past five years Jamaican stocks have surged close to 30%, four times more than the next-best nation, and the main index rose 29% in 2018. These numbers appear amazing because it doesn’t take much investment to make a tiny market come alive - there are 37 stocks in the main Jamaica index and their total value is less than $11 billion! But, people are investing, which suggests that the investment community is comfortable with the opportunity.

The headquarters of the financial industry’s main players are mainly in New Kingston, an area that is hugely different to the poverty stricken Trench Town or the tourist-packed resorts. Expect high supply of luxury cars and symbols of western consumerism like the Starbucks logo. Kingston still appears on lists of the most dangerous cities in the world, but the World Bank ranks Jamaica as one of the best countries in which to start a business.

There are still plenty of limitations to consider. The equity market is very small as already mentioned, the amount of shares available for public purchase is also very small because many companies are owned by conglomerates, the dominant bank (NCB) is mainly owned by a Jamaican-Canadian billionaire’s company, and often Jamaican stocks don’t trade for days. However, there are plenty of signs that things are changing. The time it takes to settle trades has been shortened to a couple of days to comply with international standards, the exchange is going to introduce market making, a way to ensure stocks have buyers and sellers, and it’s also investigating many other tools familiar to traders in bigger markets.

So, expect to hear more about this Caribbean haven of opportunity because it could be a gem in many investment strategies of the near future.