Chart Nerds: Stock Exchanges vs. The Falling Dollar

dollar_stockexchange_percentagemovement
Sources: Bank of Jamaica, The Jamaica Stock Exchange

For all of the “Chart Nerds” out there, diGJamaica has tracked the depreciation of the Jamaican dollar against the change in the major Jamaica Stock Exchange Market Indices since the end of December 2012. This is depicted in the chart above.

The relative depreciation (vs. December 2012) in the exchange rate is captured in the red bars, while the relative change (vs. December 2012) in the indices are captured in the line graphs.

This shows that at the end of October 2013, the JSE Market Index is at basically the same position it was during March 2013. After gaining some momentum through the GOJ/IMF agreement, the realisation that austerity was actually being implemented by the GOJ has dragged the market back to pre-IMF lows.

The Junior Market, however, has continued to raise capital for new entities and in the wake of the GOJ/IMF agreement, rose by 17%. Junior Market gains, continued throughout the period. However, with the news that the tax incentives enjoyed by the Junior Market are to be phased out by 2021, the market has given back some of its gains. The rush to list on the Junior Market before December 31, 2016 is now on.

Is this a sign that the Government has cut off its nose to spite its face? Could the Junior Market’s incentive’s been revised rather than be completely removed?