Mon | Sep 23, 2019

Gooden wants JSE opened up to micro listings

Published:Sunday | February 10, 2019 | 12:16 AM

The junior market of the stock exchange has been the source of $10 billion worth of equity capital for small enterprises in the decade that it has operated.

And, if an investor had bought shares in National Commercial Bank in the 2002, the year that Michael Lee-Chin acquired it, they could have seen as much as a 6,000 per cent return on their money.

That’s the type of information that NCB Capital Markets CEO Steven Gooden deployed at the Jamaica Stock Exchange’s latest public outreach on Thursday, a street-based event staged downtown Kingston that was dubbed ‘Market Meets the Market by the Sea’.

Since the advent of the junior market in 2009, some 38 small companies have tapped it for capital, and it’s now time to open the door to even more enterprises, said Gooden.

“With the success of the junior stock exchange, which targets companies valued between $50 million and $500 million, I now call on the JSE and the relevant authorities to advance earlier discussions to create a third tier of the market called the micro stock exchange. This exchange would handle stocks of companies valued between $5 million to $50 million,” said the NCB Cap CEO.

“The collective contribution of micro enterprises to economic growth is huge as a large percentage of input expenditure, either in the form of raw material and/or labour, and profit margins flow directly back into the economy. It is for those very same reasons local economists will tell you that for Jamaica to achieve high levels of GDP growth the agricultural sector is key because of its structural make-up,” he said.

As to that 6,000 per cent NCB return, Gooden said he was recounting a conversation with Lee-Chin, the bank’s principal owner and chairman, who said that: “If one bought $10,000 worth of NCB shares on March 22, 2002, with quarterly dividends reinvested, these shares would be worth approximately $626,000 today, a gain of over 6,000 per cent and a compound annual gain of just under 30 per cent.”

He was making a broader point that persons don’t have to be rich with lots of cash to be stock market investors.

“The message here,” he said, “is that with $10,000, or substantially less, every Jamaican with the means has the opportunity to participate in wealth creation. Jamaica is poised for strong economic growth. Strong economic growth implies a vibrant business environment.”

avia.collinder@gleanerjm.com