Durrant Pate/Contributor

Despite steady improvements in the inflation and interest rate environment, the Jamaican stock market remains volatile.

The week-over-week downswing has continued with some respite last week, with trading activity resulting in a majority of the indices, namely eight out of nine advancing, save for the Jamaica Stock Exchange (JSE) USD equities index. Although this is left to be seen on a consistent basis, this performance begs the question of whether or not investors began to react to the continued improvement in the inflation rate, which is now for the first time since July 2021 is within the Bank of Jamaica (BOJ’s) target range at 5.8 per cent.

It is anticipated that the performance of the stock market should improve, as expectations of lower inflation continue to drive down current and expected market interest rates, which augurs well for valuations. However, with other factors at play, such as investor sentiment and seasonal trends given that now is the time that some persons “sell in May and go away“, the performance over the next few months will bear testament to which of these opposing factors triumphs.

Performance of Manufacturing & Distribution Index

The JSE Manufacturing & Distribution Index saw the greatest advancement (2.73 per cent) of all the indices last week. Of note, the three largest market capitalisation stocks for the index – Wisynco, Seprod and GraceKennedy were up last week advancing by 10.99 per cent, 2.62 per cent and 0.12 per cent respectively.

While there is no direct news to support the improvement, all three companies notably saw improved profitability in their latest financial releases earlier in the month. Wisynco saw a 23.8 per cent increase in profits for their nine-months ended March 31, 2023, while Seprod and GraceKennedy saw net profit increase by 127.8 per cent and 20.7 per cent respectively in Q1 ended March 31, 2023.

Wisynco’s performance was driven by a 26.9 per cent increase in revenues due to higher demand for their products and an increase in its production capacity to meet the increasing demand while Seprod achieved a 129.2 per cent rise in revenues driven by continued growth in the Trinidad and Guyana markets, acquisition of A S Bryden & Sons Holding, a 25 per cent increase in export sales and organic growth in the domestic market due to post COVID-19 economic recovery.

GraceKennedy also saw revenues grow by 7.8 per cent driven by an improvement in all business segments along with lower logistics and freight rates which helped to contain costs. On the other hand, a 15.0 per cent w-o-w decline in PBS shares contributed to the decline of the JSE USD equities Index.

Market activity was influenced by trading in 126 stocks of which 52 advanced, 59 declined and 15 traded firm. Market volume amounted to 133,381,604 units valued at over $463,892,649.76, up from the 118,377,376 units in the previous week. Paramount Trading (20.81 per cent), FosRich (13.97 per cent) and Transjamaican Highway (12.59 per cent) were the volume leaders.