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T&T stutters, Barbados and Jamaica falter

Today we at Bourse provide a recap of the local and regional equity markets for the six-months ending 30th June 2014 (the period) and take a look at what’s on the horizon during the latter half of 2014 for the local stock market.
The local equity market’s performance, although contracting year-to-date (YTD), continued to fare better than its regional peers in HY 2014. The T&T Composite Index (TTCI) started the year on a downward trend, closing off HY 2014 with a negative return of 1.6 per cent.The All Trinidad & Tobago Index advanced 1 per cent for the same period. In US$ equivalent, the TTCI decreased by 0.5 per cent, whereas the All Trinidad and Tobago Index returned 2 per cent (Exhibit 1).

T&T Equity Review
Trading Activity
On the Trinidad and Tobago Stock Exchange (TTSE), the overall volume of shares traded on the total market, for the period, was 55.5M shares, with a total value of TT$705.67M.

Ordinary Shares
For the first half of this financial year, a volume of 49.7M ordinary shares crossed the floor. This represents a 23 per cent increase in traded volume when compared to the 40.6M shares that traded in the comparative period last year. The value of shares traded increased 19 per cent to TT$581.4M, as illustrated in Exhibit 2. For the past three years, activity on the TTSE has been steadily increasing with Total Values and Volumes of shares traded during the HY 2014, at an all-time high, despite the relatively muted performance by the TTCI for the same period.

Mutual Fund Shares
For HY 2014, CIF had volume of 5.7M shares crossing the floor. CIF closed HY 2014 at a price of $21.50, 2.2 per cent lower than its opening price of $21.99. CIF was the overall market value leader, comprising $123.9M or 18 per cent of total market value of shares traded and 10 per cent of total volume of shares traded.

Volume Leaders (Ordinary Shares)
Taking the top spot in volume leaders was NCBJ, accounting for 40.2 per cent of traded volume (4.3 per cent of Traded Value) with 22.3M shares crossing the board. Jamaica Money Market Brokers (JMMB) followed, registering a volume of 4.3M or 7.7 per cent of the total volume traded (36 per cent of Traded Value). National Flours Mills (NFM) followed with a volume of 2.6M or 4.7 per cent (0.5 per cent of Traded Value), and Trinidad Cement Limited (TCL) came in fourth registering a volume of 2.55M or 4.6 per cent (1 per cent of Traded Value). First Citizens Bank Limited (FIRST) closed off the top five, registering a volume of 2.50M or 4.5 per cent (17 per cent of Traded Value).

Value Leaders (Ordinary Shares)
As it relates to the value of transactions, Republic Bank Limited (RBL) led the board with TT$100.5M in value traded (17 per cent of Traded Value), followed by FIRST with TT$97.2M (16.8 per cent of Value Traded). The West Indian Tobacco Company Limited (WCO) took third place with TT$73.2M (13 per cent of Traded Value), whilst ScotiaBank Trinidad and Tobago Limited (SBTT) and Neal and Massy (NML) followed with TT$65.7M (11 per cent of Traded Value) and TT$59.7M (10 per cent of Traded Value) respectively.

Stocks Advancing
The number of advances was slightly higher than declines for the period. Of the 29 ordinary shares listed on the first tier, there were 15 advances, 13 declines and 1 unchanged. The top five advances and declines can be seen in Table 2 and 3 below. Despite advances outnumbering declines, the TTCI moved lower by 1.6 per cent for the period ending June 30th 2014. The main drivers of this were depreciations in FCI and FIRST, which declined by 23.1 per cent and 13.1 per cent respectively. FCI and FIRST made up, on a combined basis, 18 per cent of the TTCI market capitalization as of December 31, 2013. As at June 30, 2014, these two stocks accounted for 15 per cent of the total TTCI market capitalization.
Leading the advances for the quarter was LJ Williams B (LJWB) which gained 38.5 per cent. The total number of shares that crossed the floor for LJWB was 35,400 with a total value of $28,204.00 (0.005 per cent of Total Value Traded), which speaks to the illiquidity of the stock Following LJWB was One Caribbean Media Limited (OCM) which advanced 24.4 per cent. NML appreciated 14.9 per cent, while Point Lisas Industrial Port Development Corporation Limited (PLD) gained 12.2 per cent, and Unilever Caribbean Limited (UCL) increased 10.8 per cent.

Stocks Declining
Of the top five stocks declining, 3 were Trinidad and Tobago companies, while the other two were cross-listed from Barbados and Jamaica. First Caribbean International Bank (FCI) declined the most, slipping 23.1 per cent whilst Flavorite Foods Limited (FFL) depreciated 18.4 per cent. FIRST and ReadyMix (RML) declined 13.1 per cent and 12.1 per cent respectively whilst the cross listed Jamaica Money Market Brokers Limited (JMMB) fell 11.8 per cent.

Market Developments, Outlook and Opportunities
Although the Trinidad and Tobago Composite Index registered negative growth for the year, this was mainly a result of a 23 per cent decline in First Caribbean International Bank (FCIB) which comprises of 7 per cent of the entire market. Softer market conditions may present buying opportunities to investors.
Amidst conditions of low interest rates and considerable financial system liquidity, dividend yield continues to be a driver of trading activity in the market. This has been tempered by valuations, where the Market Price-to-Earnings Multiple remains elevated at 18.6x.
For the second half of the year, local investors should look forward to the pending IPO of Trinidad and Tobago NGL Limited (TTNGL) which would provide an investment avenue into shares of Phoenix Park Gas Processors Limited. The expected timing of the listing of Phoenix Park Gas Processors through IPO remains H2 2014, although the July opening date (according to several reports) appears less likely.

Stock Picks Deliver
As investors may recall, Bourse would have presented our top stock picks for 2014 at the start of the year. The performances of our picks - NML, OCM, NEL GKC and CIF - are summarized in the table below:
To put into perspective, an investor building an equally weighted portfolio of these picks on January 1st 2014 would have benefited from a return of 8.8 per cent. This portfolio would have outperformed the TTCI by 10.4 per cent.
In keeping with our local market investment themes for 2014, investors should continue building their portfolio by adding stocks which provide a rewarding combination of dividend yield and/or potential for price appreciation. Next week, we present our revised picks for the second half of 2014.

For more information please contact Bourse Securities Limited, at 628-9100 or email us at research@boursefinancial.com.
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