Chart of the week: Why Jamaican stocks are racing ahead

In 2018, Jamaica’s benchmark stockmarket index rose by 29% in US dollar terms, the world’s best equity-market performance.

931-COTW-634

In 2018, Jamaica's benchmark stockmarket index rose by 29% in US dollar terms, the world's best equity-market performance. In the past five years, it has quadrupled. This sort of jump usually reflects a radical improvement in the macroeconomic backdrop.

But in this case it's chiefly due to the market's small size and illiquidity. It "doesn't take much investment to make a tiny market boom", says Bloomberg. The total value of the index's 37 stocks is less than $11bn, "smaller than the valuation of Chipotle Mexican Grill Inc". Moreover, many companies are majority-owned by foreign conglomerates, which further reduces the number of shares available. Some stocks don't trade "for days or even weeks".

Recommended

Bullish investors return to emerging markets
Stockmarkets

Bullish investors return to emerging markets

The ink had barely dried on the US-China trade deal before the bulls began pouring into emerging markets.
27 Jan 2020
Beware the hidden risks when investing in emerging markets
Investment strategy

Beware the hidden risks when investing in emerging markets

Emerging markets look cheap compared with developed countries, but earnings may be less trustworthy.
23 Dec 2019
The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Emerging markets: buy when the news is bad
Emerging markets

Emerging markets: buy when the news is bad

Emerging markets are being squeezed by local turmoil and by more general factors. But bad news can spell opportunity for investors.
5 Nov 2019

Most Popular

No, the UK did not “plunge” into recession yesterday
UK Economy

No, the UK did not “plunge” into recession yesterday

That the economy took a massive hit due to Covid-19 should be news to no one, says John Stepek. The real question is what happens now.
13 Aug 2020
Inflation spiked in the US last month – is this the shape of things to come?
US Economy

Inflation spiked in the US last month – is this the shape of things to come?

Prices in the US rose much more dramatically than expected in July. Can we expect more of the same, and what does that mean for your money? John Stepe…
14 Aug 2020
The MoneyWeek Podcast: house prices, staycations, and the death of cash
House prices

The MoneyWeek Podcast: house prices, staycations, and the death of cash

John and Merryn talk about the rise in UK house prices and the fact that everybody is holidaying in the UK, plus gold's new highs, the death of cash, …
12 Aug 2020