Jamaica’s stock market has experienced the largest rally in history over the past five years, and the rally shows no indication of slowing down. According to Bloomberg, Jamaica’s benchmark index gained 19 percent in terms of dollars in 2018, the greatest amount shown by the over 90 primary equity gauges tracked by the firm. In the last five years, Jamaica’s rally of 233 percent is much higher than the 86 percent rally ranked as second largest in the world, the Ho Chi Minh Stock Index in Vietnam and the 73 percent rally of the Standard & Poor’s 500 Index.
The government of Jamaica has targeted a yearly economic growth rate of five percent by 2020. The billions of dollars in investments from China has helped the country upgrade its ports and highways. Jamaica has also significantly reduced its borrowing under an International Monetary Fund (IMF) program in its efforts to control one of the largest debt burdens In the world.
According to Marian Ross of Sterling Asset Management in Kingston, this is the first time in several years that the government has not borrowed excessively from the local market, while the Central Bank has issued instruments at historically low yields at the same time. The stock market is the sole repository for the liquidity, said Ross. Additional funds could flow into local equities if regulations on pension funds are eased, Ross added.
The $8 billion market capitalization of the index is equivalent to some 0.09 percent of the value of the S&P 500. This is dominated by financial services firms. The top-performing firm is Barita Investments Ltd., a stock brokerage company, that has seen shares rally 129 percent in dollar terms in 2018.
The Jamaican economy is expected to grow by two percent in 2018, according to a Bloomberg survey of analysts. This is the most rapid pace seen in over ten years.
