Hurricane Melissa triggers stock selloff as investors seek cash

 

Christopher Thomas, Senior Investment Advisor at Mayberry Investments, says the sharp decline on the Jamaica Stock Exchange (JSE) this week reflects investors' need to access cash following the widespread disruption caused by Hurricane Melissa. 

 

He explained that many investors have been selling stocks to meet daily cash flow needs and to assist relatives and communities affected by the storm. 

 

The JSE Combined Index fell by 7,581 points, or 2.35 per cent, with 93.7 million units traded, valued at $364 million for the week. 

 

Mr. Thomas added that some investors are concerned about the inflationary impact of the hurricane, noting that the increased need to import food and other commodities due to damage to the agricultural sector could put additional pressure on the Jamaican dollar. 

 

He cautioned that this may prompt the Bank of Jamaica to maintain its tight monetary policy, including high interest rates, which typically dampen investor appetite for stocks.

 

At the same time, Mr. Thomas noted a shift in market sentiment, as investors have been selling shares in sectors expected to be negatively affected by the hurricane and buying into construction, retail and petroleum distribution companies, which are likely to benefit from recovery and rebuilding efforts.