It may take some time before the entertainment index of the Jamaica Stock Exchange really begins to recover, warn the analysts of Taking Stock with Kalilah Reynolds.

They noted that with high inflation projected to last for the foreseeable future, investors may be looking to invest in “safer” securities.

The Government of Jamaica announced last week that the entertainment industry has been given the all-clear to reopen following a fall in the number of new COVID-19 cases and deaths in the island.

Prime Minister Andrew Holness made the announcement during his budget presentation to the House of Representatives on March 17. During his speech, the Prime Minister also announced a suite of incentives aimed at boosting the entertainment industry’s recovery.

He announced a 50 percent reduction in permit fees for the next six months and $500 million in ‘start up’ grant loans for vendors who contribute to the entertainment industry, as well as small and medium-sized enterprises.

Following the announcements, the stock price of entertainment companies such as Main Event and Palace Amusement did see an increase; however, the analysts said it may take months before there is any real action in price movements.

Senior Wealth Advisor at Ideal Securities Brokers, Dwayne Taylor, said investors are prioritising where they want to put their funds.

“With inflation on the rise, people are looking for investment options that can offer them a safe haven, so to speak, because you know with inflation stock prices tend to take a hit,” he said.

Taylor said there will be some recovery in entertainment stocks with the reopening of the sector, however, that may play out over the next couple of months once events really start taking place and people are comfortable going out.

“I do think there is a positive outlook for them, however, we’re still in the early days,” he said.

Meanwhile,dsa Assistant Manager of Private Equity at PROVEN Wealth, Julian Morrison, echoed similar sentiments.

Morrison said that investors risk appetites may be low at this time as the realities of high inflation weigh on their minds.

He noted that the situation is even more intense for countries like Jamaica who rely heavily on imports.

“What’s interesting is that developing countries like Jamaica with high exposure to the US economy, will be disproportionately affected because we don’t produce much locally,” he explained.

He said that whenever supply chains tighten, it will increase the cost of imports which in turn increases the impact on the Jamaica markets. He added that there has been a paradigm shift in how people do business and as such many investors have adjusted their risk appetite to match.

Morrison did note however, that some investors may be willing to take sector bets and bets on specific companies.

Sector bets refer to making investments based on the appreciation of a potential of an industry. Essentially, investors know what the industry can offer and are willing to risk negative outcomes because they know in the long run it can produce favourable returns.

Morrison called it a “mixed-bag” in terms of what investors are willing to risk given the uncertainties associated with the COVID-19 pandemic.

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