The Jamaican financial market went from one to two companies listing on the market each year to approximately ten for 2018. With so many companies choosing to raise funds on the stock market instead of going to the bank for a loan to expand their business, investors are left wondering which IPOs are worth considering.
An initial public offering, known commonly as an IPO, marks a pivotal moment in the life of any company. IPOs have played a significant role in getting more and more Jamaicans interested in the stock market and also saw a record number of companies choosing to go public in 2017. Gone are the days of, “only the rich can invest”; investments and financial literacy is an everyman game.
With the government of Jamaica offering very attractive incentives for companies to list, they provide small and medium-sized enterprises (SMEs) a chance to grow which in turn benefits the economy providing jobs and promoting an overall healthy economy which is always a good thing.
However, there’s another way an IPO can go, and it’s nowhere near as glamorous or champagne-worthy as the scenario mentioned above. While there are some genuine gems in the market, there are also some cubic zirconias in the mix too. These cubic zirconias naturally become placeholders on Jamaica Stock Exchange.
IPOs tend to promote trading not necessarily investing. While the terms are used interchangeably, for this article, trading refers to the buying and selling of stocks based on price alone while investing relates to choosing a company based on fundamentals and thinking long-term. Not saying trading is the evil step child, however creating wealth requires the right combination of both.
Sometimes, it may be hard to figure out which IPOs are the gems, cubic zirconia or diamonds in the rough just waiting for the opportunity to shine.
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