Jamaican Stock Exchange Best in the World
New Kingston, Jamaica- the financial center of the country. Source: https://commons.wikimedia.org/wiki/File:Night_Veiw_Of_New_Kingston,_Jamaica.jpg
According to a Bloomberg study published October 9 tracking 94 stock exchanges over the past 12 months, Jamaica’s stock exchange is the best performing. The report attributes much of the success of the Jamaican stock exchange to the successful completion of recommendations put forth by the International Monetary Fund (IMF). The IMF had created a rehabilitation program for the stagnant Jamaican economy, and by meeting the program goals early, the economy was able to fully recover and continue to flourish.
In the last year, the stock exchange grew by 35%, or 11 billion US dollars. Over the last five years, the stock exchange has grown by approximately 600%, the best growth rate in the world. Moreover, the government has greatly reduced its debt. Six years ago, government debt was 147% of the Gross Domestic Product (GDP) of Jamaica, whereas last month, the Jamaican government sold USD $815 million bonds, allowing it to maintain “one of the world's biggest budget surpluses.''
The reduced debt has led to an increase in consumer confidence, which has caused the unemployment rate to drop to the lowest point it has ever been in recent history. According to Standard & Poor's Financial Services LLC, a global financial services company, “Jamaica has made material progress in achieving macroeconomic stability and strengthening of its external position, improving its ability to withstand external shocks.”
Commenting on the Jamaican economy, the IMF’s Jamaica mission chief, Uma Ramakrishnan, says: “If I could hold a megaphone and tell investors now’s the time, I’d do it.” This message has resonated globally: the amount of Jamaicans with brokerage accounts has increased by over 5% in the last 10 years. Furthermore, the Jiuquan Iron & Steel (Group) Co Ltd (JISCO), a Chinese steel manufacturer, has already invested USD $6 billion in order to build an industrial park in Jamaica.
Despite the positive indicators in the Jamaican economy, critics are quick to point out that the Jamaican stock market is too miniature to support heavy economic activity. Within the small stock exchange, the amount of public shares and offerings are even smaller. One-third of the stock index is owned by the Jamaican bank NCB Financial Group Ltd. Furthermore, according to Bloomberg, it is “common for some Jamaican stocks not to trade for days or even weeks.”
To address these criticisms, the managing director of the Jamaican stock exchange, Marlene Street Forrest, is planning to add features of larger stock exchanges to help with the growth of Jamaica’s. There are already 20 planned new listings for this year, including several new initial public offerings. Though it is the best-performing, Jamaica is far from the largest stock exchange: the global stock market continues to be dominated by New York, Tokyo, and London.