Sagicor is now the largest publicly traded company in Jamaica!  Yup, Sagicor has dethroned NCB as the biggest company on the Jamaica Stock Exchange.

I recently saw this article in the Jamaica Observer, and it said Sagicor Group is now the most valuable company on the JSE by market capitalisation, after surpassing NCB Financial Group. 

For you to understand this, we need to break down a few things.

So, market capitalization is simply how much the company is worth based on the stock market. And this has everything to do with the company’s stock price. 

Market cap is calculated by multiplying the stock’s current price by the number of outstanding shares. Outstanding shares are the ones held by shareholders. So the more shares a company has and the higher the stock price, the larger its market cap.

Now NCB has been the company with the largest market cap on the JSE since 2009. Until last year. 

In 2022, NCB Financial’s stock price fell 36% from $124.26 to $79.92.  And if you take it from pre-covid, the fall is even steeper!  Just before covid hit, NCB was trading at well over $210.  But at the time I record this video, it’s down to just $71 dollars.  That’s a 66% decline in the past three years.

And because NCB’s stock price has fallen, that means its market cap has also fallen.  NCB’s market capitalization is now J$197 billion – or about US1.2 billion.

Meanwhile, Sagicor Group’s stock price inched up about 3% in 2022 from $55 dollars to almost $57. And when you multiply that by the number of Sagicor shares out there, that small increase was enough to replace NCB at the top spot.  Sagicor’s market cap rose to $222 billion, while NCB’s fell to $197 billion. 

So why has NCB’s stock price been tumbling so badly?

Our analysts on Taking Stock have been talking about how the stock market overall has been taking a beating since the pandemic. People have been moving away from the volatility of the stock market and looking for more stable investments, like bonds, CDs and real estate.

So number one – the whole market is down.  The JSE combined index fell 8% in 2022. That means on average, your stocks were worth 8% less than what they were worth in 2021. And for some people, that’s a deal breaker. 

So they have been trying to find investments with higher and more stable returns. Especially with interest rates as high as they are now, there are other investments that could be more profitable.

Number 2 –  NCB has some issues of its own. The company has been the target of a number of scam attacks and employee fraud scandals over the past two years. This could have eroded investor confidence in the company, even though we know that scamming and employee fraud is not exclusive to NCB… *cough* SSL!

And then number 3 – the whole issue of dividends. NCB has not paid dividends for over two years now, and investors are definitely not happy about it.

 You have to remember that NCB is Jamaica’s largest commercial bank. That same Observer article that I was talking about earlier noted that NCB Financial Group earned the most revenue on the JSE – J$149.6 billion.  That’s just under US$1 billion.  And NCB Financial includes other subsidiaries for the group but you get the point.

So, a lot of investors are looking for that success to be shared with them through dividends.  Older investors especially tend to rely on regular dividend payments even to pay their bills.  But that hasn’t been happening sooo… some of them have given up and moved onto something else that will pay them. 

One of our Analysts, David Rose also explained that NCB might be hoarding cash because Jamaica is considering implementing Basel III. 

Basel III is an international regulatory standard that requires banks to hold more cash on their books.

He explained that since NCB is the island’s largest commercial bank, it would likely be required to have a higher amount of money in reserves to meet the new standards. So, they actually can’t afford to pay out dividends just yet. 

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