The Jamaican Stock Exchange, or JSE for short is the only stock exchange operating in Jamaica and is the best stock exchange in the world according to Bloomberg. JSE has seen tremendous success since 2015 and has since been called the world’s leading stock exchange.
The JSE, the most advanced stock exchange within the Caribbean region began operation in 1969. It can be considered an improvement for the Kingston Stock Market. Surfacing in 1961, the Kingston Stock Market enabled the sale of shares primarily via banks and lawyers, under the guidance of the Bank of Jamaica (BOJ). The JSE was established with the aim of facilitating the mobilisation of capital to support the growth and development of companies and by extension, the economy. In return, shareholders will be issued a suitable return on their equity. Essentially, their goal is to provide an efficient way to assist businesses which need investors for expansion and corporate growth. This will in turn, have a ripple effect on the economy. The JSE took advantage of this themselves and became a publicly traded company - Jamaica Stock Exchange Limited (a limited liability company). The company issued an initial public offering (IPO) in 2013 in an effort to settle (then) outstanding debts and increase their product and services offered. Each share was initially sold for JMD$2.85 to the general public and JMD$2.55 to staff and preferential investors.
The Jamaica Stock Exchange (JSE) Market Capitalization is approximately USD$9.11 Billion or JMD$1.215 trillion. There are more than 50 companies listed from various industries but primarily finance, technology and communications. It is one of the most liquid and sector-diverse stock exchanges. Trading on the Jamaica Stock Exchange occurs weekly, Monday to Friday between 9:00 a.m and 1:00 p.m.
Primary Services of the JSE Group include but are not limited to:
Additionally, the JSE offers market research competition, training, education and ISIN Issuing Agency. There is also a library which stores information both physically and electronically, dated back to the inception of the JSE.
The JSE has two subsidiaries, namely the Jamaica Central Securities Depository Limited (JCSD) and the JCSD Trustee Services (JCDTS).
Established in 1998, the JCSD has made it obsolete for stakeholders (owners of stock) to hold physical stock certificates. It allows for a more efficient, electronic proof of ownership. Brokers are now permitted to register stockholdings in their clients’ JCSD accounts. A book-entry system is employed for safer and more efficient transfer of ownership.
JCSDTS was founded in 2008, under the same board as the JCSD. The entity’s purpose is to provide trustee services when necessary. A trustee is a person or in this case, a group of people (a firm) which acts on behalf of a third party, distributing assets.
There are four markets under the Jamaican Stock Exchange, namely, Junior Market, Main Market, Bond Market, and the US Denominated Equities Market (which is the first of its kind within the Caribbean). Also managed by the group is the USD Junior Market for which there are no instruments listed currently.
In order to invest, a broker is necessary. A broker may be considered the bridge between the market and the client, and operate from an organisation known as a brokerage. The broker has the advantage of obtaining the best prices from the exchange prior to trade execution. An electronic platform was developed and has been in use since the beginning of 2000. Consequentially, brokers are no longer tasked with physically travelling to execute orders for their clients or themselves. They may now control their portfolios remotely.
The JSE Junior Market was launched in 2009, purposed to include the less liquid investor and smaller companies. Its creation should further promote investment in Jamaica’s entrepreneurship (encourage emerging start-ups), employment and holistic economic development. The JSE Junior Market was curated especially for small and medium-sized enterprises (SME), enabling them to raise capital. To date, there are 41 companies listed on this market of both ordinary and preference shares from a diversified set of industries. A settlement is given a two-day maximum (T+2), with the daily dissemination of related information.
Criteria for listing on the JSE Junior Market
The JSE Main Market is comprised of both ordinary and preference shares from companies with the largest market capitalisation. It includes , at the moment, over 50 listings from a wide scope of industries not limited to banking and finance, retail, and communications.
Criteria for listing on the JSE Main Market
US Denominated Equities Market
Launched in the summer of 2011, the JSE US Dollar Equities Market, or US Denominated Market allows companies to have shares listed in US currency, as well as allow for trading and settlements in USD. It operates under the same rules as the Main Market, and settlement is given a two day maximum (T+2), with the daily dissemination of related information.
Launched in 2013, it is purposed with diversifying the options available for raising capital and assisting with efficient money management. Debt securities are bought and sold be it at issue from the borrower, or at a later date from other investors. Operates under the guidelines of the Main Market, and caters to any CARICOM associated incorporated or registered entity.
JSE Market Performance
Market performance is tracked by various indices. In the case of the JSE, the weighted average market capitalisation method is employed for its index calculations (the aggregate market capitalisation is divided by a base divisor.
Formula obtained via the JSE website:
Measures the performance of all ordinary shares listed on the Main Market
Measures the performance of only Jamaican companies listed on the Main Market
Measures the performance of the 15 most liquid ordinary shares on both the Junior and Main Markets
Measures the performance of only foreign companies listed on the Main Market
Measures the performance of all ordinary shares listed on the Main Market
Measures the performance of all ordinary shares listed on the Junior and Main Markets
Measures the performance of all ordinary shares on the US Dollar Equities Index.
The JSE applies the weighted average market capitalisation formula to calculate its indices. 2018 saw an increase of 29% in USD terms. The 2018 performance is especially noteworthy given that the contrary was recorded by most indices worldwide. The Chinese market, for instance, experienced a reduction in 2018 almost equivalent to the 2018 increase of the JSE. The Jamaican market has been primarily bullish (in an upward trend), with a 233% surge observed since 2015.
Purchasing Stocks through the JSE
The information below is not to be considered extensive. The purpose of this is to provide a brief overview of what to expect prior to joining the Jamaican Stock Exchange.
The JSE has partnered with a Toronto-based Fintech company - Blockstation - in an effort to become first international stock exchanges to launch an online digital cryptocurrency and trading platform. This is just one of the many ways the exchange has been taking steps to be proactive, and provide a diverse range of services for their clients.
Image credit: Bloomberg
Writing credit: Ashley Belinfante
Neither caribbeanlinkz.com nor our writers provide tax, investment, or financial services and advice. The information above is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor, for the purpose of general knowledge. Past performance is not indicative of future results. Investing will always involve a risk including the possible loss of principal. Seek a professional financial advisor for how to proceed.
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