Head of Asset Management at JN Fund Managers, Hugh Miller, says retail investors have not been responding to positive earnings reports and have been targeting their dollar towards more innovative companies. 

Speaking on Taking Stock with Kalilah Reynolds, Miller said that this earnings season has confirmed the trend which first emerged just before the start of the pandemic, with retail investors becoming the dominating presence on the stock market.

Companies have been releasing mostly positive financial reports since the start of July. However, the Jamaica Stock Exchange’s Combined Index declined by 1.28% this week while the Junior Market index declined by 1%.

Miller said that based on his observation, retail investors have been targeting their dollars to companies that are marketed as more innovative. 

“With the retail investors now exerting themselves in the market, what we’re now seeing, which is evident in this earnings season, is that retail investors, who don’t have the deep pockets like an institutional investor, are targeting their investor dollar to specific stocks,” he said.

He noted that in previous earnings seasons, with many companies posting such positive results, there would have been a broad base rally in the market, with the stock prices reflecting the positive news. 

“When we look at some of the earnings reports that came out in July/early August, a lot of the companies in the financial and manufacturing sectors have recouped the losses from the pandemic,” he said.

According to Miller, many of those companies have reported net profits back at pre-pandemic levels or higher, but the stock price has still not responded.

“JMMB has come in with some strong numbers… with their 6-month numbers well above pre-pandemic levels. Same thing for Carib Cement, as well as Seprod. However, the [stock] prices have not responded commensurately,” Miller said.

The Manufacturing and Distribution Index fell 2.36% last week and the Financial declined 1.14%. 

“Where we’re seeing the vibrancy is on the Junior Market,” he noted. 

Miller said this could be linked to retailer investors being more attracted to the types of companies listed on the Junior Market.