The Jamaica Stock Market hit the ground running in 2008 thanks to Angostura’s offer to purchase Lascelles’ shares in late November 2007 for USD 10.65 per share. Once the deal was confirmed on February 8, the JSE Main Index soared to 113,214.54 points, up 5.3% from 107,514.98 at the start of the year. Soon after, the Main Index broke 114,000 for the first time in its history.

The Lascelles’ deal was a refreshing boost to the market, but the excitement was short lived. On March 14, Wall Street giant Bear Stearn’s collapsed trampling investor confidence worldwide. That, mixed with anxiety about the Jamaica Labour Party’s budget presentation in April was enough to dampen investors’ spirits. At the end of March, volumes on the JSE dived from 338mm units traded in February to only 88mm traded in March. All three indices declined with the JSE Main Index falling below 104,000. Gleaner Company’s stock fell 32.56%, while Salada Foods surged 109.09%.

Things looked up at the start of the second quarter. The JLP presented an optimistic budget on April 10, sending the Main Index all the way up the 112,279.37 on May 14. On May 21, Carreras’ Board of Directors announced a special capital distribution of JMD 8.30 per stock unit, plus an interim dividend of JMD 2.00 per stock unit to be paid on June 30. CAR’s stock surged to JMD 91.99, up 33% from JMD 69.00 that it traded at on January 2.

Jamaica Broilers was also in the spotlight during the April-June period as the Company released outstanding YE 2007/2008 earnings on June 13 with turnover increasing an impressive 78% from JMD 11.49B to JMD 20.45B primarily due to revenues from ethanol operations. EPS for the 3 months (3M) ended May 3, 2008 jumped 167% to JMD 0.35 v. EPS of JMD 0.13 for the 3M period ended April 28, 2007.

Meanwhile, Jamaica Producers was taking matters into its own hands by purchasing Holland’s leading fresh juice and smoothie manufacturer, Hoogesteger Fresh Specialists BV valued at EUR 9.2mm and Life of Jamaica Ltd. was busy changing its name to Sagicor Life Jamaica Ltd.

Also, Angostura Ltd. surprised Lascelles shareholders by deciding to prepay the Deferred Portion of USD 4.75 per ordinary share but the market responded quietly and the JSE Main Index actually fell (meaning priced in by investors previously). Despite good news throughout the period, confidence in the new administration weakened substantially. Also, investors soon learned that the 2nd tranche of the Angostura-Lascelles deal was already in equity prices and so the market didn’t get the push it expected.

The July-September period was a very challenging one not only for Jamaica, but for the entire world. Commodity prices skyrocketed to all time high with crude oil hitting a record high of USD 147 per barrel on July 11. The US financial crisis worsened dramatically with finance legends such as AIG, Fannie Mae and Freddie Mac being bailed out by the US government. Merrill Lynch and Lehman Brothers were erased from Wall Street, which in turn affected financial companies here in Jamaica, such as Jamaica Money Market Brokers and National Commercial Bank of Jamaica Ltd. which both had exposure to these entities, primarily Lehman Brothers. This eroded investor confidence on the local market, and we saw a number of stocks being oversold during the short-term.

To make matters worse, during the period Companies were releasing poor results for the period ended in June. CAR reported disappointing Q01 2008/2009 results with a decline in net profit due to the unprecedented rise in Special Consumption Tax (SCT) of more than 100% over previous relative figure, as well as the succeeding application of an increase in price in April 2008. DG’s YE 2007/2008 results were also below expectations with EPS declining 25.99% to JMD 0.37, from JMD 0.50 due to soaring costs, particularly marketing costs.

Not to mention that at the end of August, Tropical Storm Gustav passed through Jamaica ruining countless crops (including JP’s banana fields in St. Thomas) and damaging a number of businesses. The JSE Main Index plummeted 7.3% to 102,018.87 on September 30, down from 110,013.92. 54 stocks traded on the JSE during the quarter of which 11 advanced, 35 declined and 8 traded firm.

All this was happening while Jamaica Producers Group Ltd. (JP) was restructuring its operations and Salada was considering a stock split. JP announced the sale of Serious Desserts business to Nobile Foods Ltd. in a deal valued at JMD 400mm. Soon after, Salada announced the details of the stock split, which was to increase the number of authorized shares in the company from 10.4mm to 500mm ordinary shares of no par value.

The going got even tougher. The JMD devalued significantly in the past 2 months exceeding the JMD 77: USD 1 mark. The Bank of Jamaica intervened numerous times by injecting USD liquidity into the market. It recently stepped in with an offer of a Special Certificate of Deposit to Primary Dealers and Commercial Banks, to mature on December 3, 2008. Interest payable on the instrument was 20.50% per annum.

Since the beginning of October, the JSE Main Index has been trending downwards falling below the 85,000 mark. A number of stocks hit their 52-week LOs in the past 2-3 weeks, with NCBJ falling to JMD 13.00 and GK closing at JMD 50.52. SGJ has traded as LO as JMD 16.00 and CAR JMD 45.00. The climate in the US market is still very turbulent, and the US government had to step in during the tail end of November to save Citigroup from crashing. The global economic environment will certainly be a challenging one in 2009.