Financial analysts Sushil Jain and John Jackson are in agreement that the local stock market is in a sustained phase of growth.

During a presentation at last week’s 12th Investment and Capital Markets Conference held in Kingston, Jackson asserted that the stock market was in the early stages of a bull market and would appreciate significantly during 2017.

Jain, who spoke with the Jamaica Observer subsequently, said he was in agreement.

“The Jamaican stock market indices are expected to rise significantly during 2017, both for the main market and the Junior market.The indices are expected to reach 280,000 and 3,600 respectively by the end of 2017.

“However, the performance of each stock will depend on the factors relevant for that stock,” he told the Business Observer.

Jackson, for his part, predicts a 33 per cent rise in the All Jamaica Index, noting that the recovery of the market over the last two years has been the consequence of low interest rates.

In 2016, the JSE captured world attention with growth of above 90 per cent, outpacing all other indexes. In 2015, it settled to under 30 per cent. Now, the analysts feel that 2017 will see a performance above this level.

The bull market, Jackson said, was in its early stages.

Jain said he disagreed with Jackson’s prescription that the simple fact of lower interest rates would keep market interest, but added that this was an influential factor.

He said, “I do not share the view that the Market indices will rise due to movement in Jamaican interest rates. In my view, although the interest rates will rise in the USA, change in the interest rates in Jamaica will not be significant.

“Interest rates in Jamaica are likely to remain relatively stable because of the stability of the dollar, low inflation , improvement in business and consumer confidence, high level of Net International Reserves, among other factors. Hence interest rate changes are not likely to have much impact on the stock prices in Jamaica during 2017.

“The most important factor in determining the stock prices is the profitability/performance of each company. The macroeconomic scenario also has its impact on company performance and stock prices.”

Jain said the macroeconomic scenario is favourable for the increase in stock prices.

“The positive developments expected to occur include increase in the growth momentum, impact of growth initiatives by the EGC, increase in FDI, increase in business and consumer confidence, growth in GDP of about three per cent, low inflation, a stable dollar, increase in tourist arrivals, building of new hotel rooms, increase in agricultural production, the implementation of the 1.5 million income tax threshold, public sector transformation, among other factors.”

Further, he added, it was expected that there would be an increase in the number people investing in the stock market, increase in the amounts invested by the pension funds in the stock market, and an increase in new public issues by the companies (IPOs).

“Overall I am optimistic about the likely impact of these developments. They should lead to higher profitability for the companies and higher stock prices,” the analyst stated.

Jain admitted that possible negatives for the market include higher oil prices, higher taxes on consumption, uncertainty about US/Trump policies, disruptions in global trade, geopolitical conflicts, natural disasters , a rise in US interest rates, significant drop in global stock prices, and drought, among other factors.

“These factors may lead to uncertainty and volatility in global /local stock prices,” he cautioned. “Hence , some stocks will rise and some will fall. Investors should therefore be careful in selecting stocks for investment.”

The analyst warned that the investments in stocks should be made with a medium to long-term investment horizon.