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'Dean' blows down stock market - Election postponement also makes impact
Published in the Jamaica Gleaner: Wednesday | August 22, 2007
Susan Gordon, Business Reporter
Stock analysts say Hurricane Dean, which pounded the island on Monday, dealt a negative blow to yesterday's trading on the Jamaica Stock Exchange (JSE).
The JSE closed trading yesterday on a declining note, which resulted in a downturn in the market. The local exchange traded volumes of 1,912,532, reflecting a more than 75 per cent decline below its average daily volume of between 8.9 million to 9.0 million.
Only three stocks advanced during yesterday's session of trading, with nine declining and seven trading firm.
Cable and Wireless Jamaica was the volume leader, trading 637,269 units yesterday and closing at 74¢.
Lost revenue
With the JSE trading on average nine million units per day valued at some $65 million, it would have lost revenue of $10.1 million from yesterday's low trading, which was valued at a mere $13.49 million.
On average, the JSE would, based on the 0.19625 per cent cess charged on the value of the total volume traded, earned $12.7 million on a regular day, but yesterday's performance reduced this to $2.6 million.
However, not all stock analysts attributed yesterday's weak performance solely to Hurricane Dean. The postponement of the general election was identified as another factor affecting trading.
"Overall, the market was slow. It was extremely slow during the first two hours of trading, as phone networks gave trouble, there were power outages and traders were signing on late or having trouble signing on," CEO of Stocks and Securities Limited, Mark Croskery, told Wednesday Business regarding the market's performance.
Robin Levy, general manager for Jamaica Central Securities Deposit (a subsidiary of the JSE), in commenting on the hurricane's impact on trading, told Wednesday Business: "We had some telecommunications challenges, some brokers didn't have electricity and a number of persons were not at work and were still cleaning up their homes."
Trading suspended
Commenting further on the market's performance, he said the more savvy investors were observing the market before resuming trading. The JSE suspended trading on Monday as a result of the passage of Hurricane Dean, which slammed the island, devastating mainly the parishes of Portland, St. Thomas, Clarendon, Manchester and St. Elizabeth.
Research manager of Mayberry Investments Ltd., Rex Shettlewood, concurred with Levy on the mood of investors, noting the "stand-back" approach of some investors to the exchange, but pointed to the postponement of the general election as a major reason.
"The postponement of the elections could have also reintroduced the uncertainty in the market," opined Shettlewood.
"There are several other factors other than 'Dean'," Shettlewood continued. He said stocks that were expected to fall in price at this time, performed better than expected as they fell at not so wide a margin. The stocks to which Shettlewood referred were Caribbean Cement Company Limited and Jamaica Broilers Ltd.
The Mayberry research manager, however, said he expected these stocks to rebound once the companies restarted production and assured shareholders that they had adequate insurance to cover any damage sustained.
Senior equity trader at Jamaica Money Market Brokers, Donnete Johnson, explained that outside of those agriculture stocks that were expected to be impacted by the passage of the hurricanes, persons may have needed cash to do minor repairs, hence the slowness of the stock market.
"This will be shortlived and we are not expecting it to continue," she declared yesterday.
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