Stock market bargains emerging

Andrew Green, Staff Reporter

Investors are being presented with new opportunities by the fall in share prices over the last two weeks, say some of the country's leading stock market analysts.

The fallout from the terrorist attacks in the United States is pushing down share prices to increasingly attractive levels, analysts say. The declines may have hit existing investors, but new players are gaining interest.

"There will be opportunities arising," said Vivian Bedassie, Edward Gayle & Company senior equities trader. "For new investors, you will be at an advantage.

The Jamaica Stock Exchange Index has fallen seven per cent since trading ended on Monday, September 10, the day before the attacks. This is a 2,614 point decline from the 35,260 level the index stood at then.

"There has been a substantial correction already," said Nigel Goffe, senior account executive at Barita Investments. And Mr. Goffe said it appeared the market index could fall further.

Several local companies were "badly affected" in the aftermath of the attacks, Mr. Bedassie said.

The immediate concern about the U.S. terrorist attacks has been that a decline in tourist arrivals will curtail local economic activity and impact negatively on company earnings which were previously rising.

"It is hard to predict what level the market is headed to," Mr. Goffe said. In this environment, investors need to think of the long term.

And even though the market index has fallen, "if you are just looking at the (JSE) Index, you can be significantly fooled," Mr. Goffe said. Though the Index may fall, "a number of the significant stocks have found buying support."

This "buying support" explains the 64-point increase in the Index on Thursday, when the Index closed at 32,646, breaking the declining trend of the previous seven trading days.

"I am getting calls from new investors expressing an interest in buying," said Mr. Goffe. "They think the market is giving them a second chance."

The JSE index has risen substantially this year from the 28,648 level at the start of the year. And even with the recent decline, the Index remains 14 per cent higher than at the start of the year.

Investors are looking at companies which are "more insulated than others" from the present economic circumstances, said Manufacturers Sigma Merchant Bank equities and research manager Rezworth Burchenson. "There are even some companies which can benefit from the present circumstances."

Current stock investors may need to go "more liquid," said Mayberry Investments research analyst Keisa Ansine. They may need to re-examine their present portfolio of stocks and switch more into cash to take advantage of the opportunities which may arise.

"You need to buy stocks based on their fundamentals," Mr. Bedassie said. Companies need to have sound management, good market positioning and a record of performance.

And some stocks are also attractive investments now for their dividend payments, Mr. Goffe said. The elimination of taxes on dividends next year promises to make the high divident paying companies even more attractive.

"There will be periods of downturn in a stock market," Miss Ansine said. "Be optimistically cautious at this time."

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