Manufacturing stocks surge 16% in Q1 as JSE rally lifts sector index

The manufacturing and distribution stocks on the Jamaica Stock Exchange (JSE) doubled the performance of the overall market or their strongest quarterly performance in recent memory. 

The outlook however, remains uncertain due to global uncertainty.

“The drop in energy supply and higher unemployment could lead to a stagnating global [economy],” stated Sagicor Select Funds Manufacturing and Distribution Fund (SELECTMD) in the preface to the financials. “The major mitigating factor would be a swift end to the conflict and a return to pre-conflict energy prices.”

The sector index jumped 16 per cent in the first quarter of 2026, outpacing the wider JSE Combined Index, which advanced some 8.0 per cent over the same period.

The Bank of Jamaica cut interest rates in February, which the Sagicor Select Funds quarterly report said "may reflect an uptick in investor appetite for equities, particularly dividend-paying stocks" — a tailwind that manufacturing and distribution companies were well placed to capture.

The Manufacturing and Distribution Index closed the March quarter at 123.08, up from 106.01 at the end of December 2025, according to the first-quarter report of the SELECTMD which tracks the index. The fund posted net income of $151.4 million for the three months ended March 31 — more than seven times the $18.7 million recorded in the same period of 2025.

The 16 per cent quarterly gain placed the sector index second only to the JSE US Equities Index, which advanced 22.45 per cent. By contrast, the JSE Financial and Cross-Listed indices declined 1.53 per cent and 7.50 per cent, respectively, while the Junior Market was essentially flat at 0.79 per cent.

West Indies Petroleum Terminal Limited was the standout stock, posting a price gain of 759.54 per cent, rising from $1.31 to $11.26. Despite the extraordinary movement, SELECTMD carried no weighting in WIPT at quarter end, against an index weighting of 14.42 per cent. Among the fund's core holdings, Wisynco Group rose 16.43 per cent, Carreras Limited — the fund's largest holding at 21.05 per cent of the portfolio — gained 11.69 per cent, and Derrimon Trading added 12.93 per cent.

Not all constituents stocks in the index rose. Jamaica Broilers Group fell 13.83 per cent, Caribbean Producers Jamaica dropped 19.63 per cent, CAC 2000 shed 19.57 per cent, and Caribbean Cream slid 16.27 per cent. GraceKennedy and Seprod also ended the quarter slightly lower.

The rally came despite a difficult fourth quarter of 2025, when the manufacturing industry contracted 8.1 per cent. Food, beverages and tobacco output fell 9.6 per cent "against the backdrop of reduced output of dairy products, beverages, meat, and meat products, coupled with lower crop yields," the report stated. For the full year 2025, however, the sector posted growth of 1.15 per cent, aided by an 8.8 per cent expansion in the third quarter as output recovered from Hurricane Beryl.

Dividend income declined 17.6 per cent to $35.6 million. Total assets grew to $5.0 billion, with cash rising 50.3 per cent to $419.1 million.

The US-Iran conflict emerged as the dominant risk. The report warned that "the higher inflation expectations will make it difficult to anticipate monetary policy for both the Federal Reserve and the local MPC", with higher energy prices threatening to slow consumption in developed markets and reduce tourism flows to Jamaica. The BOJ held rates in March after the conflict escalated and continued directly supplying foreign exchange to selected energy sector participants to preserve market stability. The report noted the conflict had "shifted energy markets towards lower supply and higher prices", with US consumer prices rising 0.9 per cent in March — the largest monthly increase since June 2022.

The fund is also moving towards a structural change. Following court-approved schemes of arrangement endorsed by stockholders in August 2025 and sanctioned by the Supreme Court in January 2026, SELECTMD and its sister Financial Select Fund are converting from exchange-traded closed-end funds into unit trusts registered with the Financial Services Commission. The board determined that "conversion of the two funds to unit trusts is the most effective solution to the issue facing shareholders" after identifying a persistent discount between the funds' trading prices and their net asset values. 

business@gleanerjm.com