Many investors were left confused and concerned on April 3 after the Jamaica Stock Exchange lost $5 billion in one day, sinking to pandemic lows.

However, The Analysts of Taking Stock agree that the selloff should not be a major reason for concern, as selloffs of this nature occur regularly.

Senior Research Analyst at JN Group, Jahmar Brown, said the decline was likely due to portfolio managers rebalancing their portfolios for the end of the quarter.

Both Brown and Business Journalist, David Rose, explained that March 31, the last trading day before the selloff, was also the end of a financial quarter and financial year for many companies.

Speaking on Taking Stock with Kalilah Reynolds, Brown further explained that it is not unusual for the stock market to become increasingly volatile at the end of a quarter or financial year.

Rose noted on March 31, 139 securities traded that day, with 55 gaining value, 37 losing value, and 47 staying the same.

“Investors will seize the opportunity to grab cheap stocks at the end of the quarter to shore up their balance sheets positions. And naturally, they exit some of those positions, the following day, to book the gains,” Brown said.

The Research Analyst noted that while selloffs of this nature occurred at the end of most quarters, the magnitude of this drop was unprecedented.

Veteran Business Journalist, Steven Jackson, noted that the stock market is under immense pressure because of the rapid and continued increase in interest rates.

Jackson noted that many investors have been repositioning outside of the stock exchange in order to diversify their portfolios to hedge against increasing inflation and interest rates.

The Analysts all agreed that while massive, the JSE’s $5 billion drop is not signalling doom for the stock market.

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