Simply put, supply and demand, driven by market sentiment, the local economy and sometimes the political environment. Where stocks are listed on global exchanges, the exposure to these same elements are on a larger scale.
When the intrinsic value of an individual stock improves, i.e. its net income, gross profit, working capital etc., it becomes attractive to investors. This is played out in trading on the exchange as demand rises and buyers, depending on the stock, will bid high to woo sellers.
If the economy is on the uptick and the overall investment market is moving, for the most part, in the same direction, the same scenario as noted above comes into play.
The Jamaica Stock Exchange has been a clear demonstration of the market’s pull and pushes as IPOs and the price of listed stocks move in and out of tandem with happenings in the market-place.
Most of the Initial Public Offerings (IPOs) on the Jamaican Stock Exchange have been ‘hits’ with investors, providing them with instant profits once listed. As supply and demand kicks in, some have continued to post record prices periodically as profits climb whereas others have been laggards.