Buckle up! It looks like Jamaica’s stock market is in for another two years of struggles.

So the year just started and already we’ve gotten some bad news.

In an interview with the Gleaner’s Steven Jackson, Managing Director of the Jamaica Stock Exchange, Dr Marlene Street Forrest said it may take until 2025 before we really start to see a rebound in the overall market.

The combined market lost 8% last year, which is a slight improvement from the 10% dip in 2022, and way better than the 22% lost in 2020.

But still, a loss is a loss, right?

And if what Dr Street Forrest is saying proves true, more losses are in store. And the reason for this is everyone’s favourite friend, interest rates.

She explained that interest rates and market performance are inversely related. So higher interest rates result in poorer market performance; lower interest rates, better performance.

Now, while the Bank of Jamaica held its base interest rate at 7% for the whole year, that’s still much higher than it was before COVID-19. And with these higher rates, a lot of investors have exited the stock market in favour of more stable securities. 

Cue last year’s 8% decline.

So, essentially we’d have to wait until interest rates start going back down before we may start to see the market’s performance improving. 

However, in December the BOJ kinda hinted at possibly raising interest rates again to stay ahead of inflation.

Inflation in November was 6.3%, slightly higher than where they want it to be.

If rates are increased it will likely delay any improvement in the market until 2025. Actually, even if the BOJ dropped rates today, it would still take two years before we see it reflected in the stock market. Because as Dr Street Forrest noted, interest rates have a lagging effect. The impact of increases or decreases isn’t felt immediately.

But it’s not all doom and gloom. Like our analysts on Taking Stock always say, there are opportunities to make money even in a down market.

And as one of the world’s richest and most famous investors, Warren Buffet always says, “Be greedy when others are fearful and fearful where others are greedy.” 

And that’s the bottom line.

Take our INVESTING FOR BEGINNERS course to learn how to start investing. The link is in the description below. Let’s get this money!