Despite measurements indicating the Bermuda stock market is more attractive than other markets, investors remain unenthusiastic about Island securities, Butterfield Asset Management Ltd. said in its bi-weekly worldwide market analysis "Financial Viewpoint''.

"The (Bermuda Stock Market) index currently has a weighted price/earnings (P/E) ratio of 7.4 times and a dividend yield of 4.75 percent which is considerably cheaper than most other stock markets,'' the company said.

"Even at these levels, however, investors are not enthusiastic as trading volumes continue to remain depressed, which is somewhat surprising given the opening of the exchange to new trading members.'' Under new exchange initiatives, three new firms recently joined the Island's banks as trading members.

The P/E ratio is the price of a stock divided by its earnings per share giving investors an idea of how much they are paying for a company's earnings power.

Dividend yield is calculated by dividing the annual per share dividend by a stock's selling price.

"The Standard & Poor's 500 index in the US currently has a P/E of 17.2 and a yield of 2.47 percent,'' Butterfield Asset said.

The S&P500 is a measurement of changes in stock market conditions based on the average performance of 500 widely-held stocks.

"The Bermuda Stock Exchange index has been unable to sustain the modest gains of the post-referendum rally and the market once again has declined below the 1,000 level this year, matching the previous low in May,'' Butterfield Asset said.

After trading as low as 980 last month, the exchange index has hovered around the 1,000 mark during recent days.

"In contrast, the recent eight percent 15 year bond offering by the Corporation of Hamilton was oversubscribed by four and one-half times indicating that there is liquidity in the market for the right type of offering,'' Butterfield Asset said.

Lack of local exchange activity continues to be linked to the Island's political uncertainty, Bermuda Investment Advisory Services chief investment officer Mr. Robert Pires said.

"The lack of activity is reflective of concern about the political situation,'' he said.

There is some investor concern that the present party in power, which is pro-business, may not unite in time to win the next election, said Mr. Pires.

The "undercurrent of pessimism'' continues, he said.

Any analysis of the Island's exchange at this time must also include the fact that there is always a cyclical lack of capital during the winter months as tourism drops, he said.

The lack of interest in Bermuda stocks is also linked to awareness of the need to diversify, Emerald Financial Group Ltd. president Mr. David Bolden added.

"Investors are getting increasingly sophisticated and there is more awareness of the need to diversify,'' he said.

Overall, there is a "systematic reallocation of assets'' with local investors showing a growing interest in overseas markets, he said.

Investors likely prefer the Corporation of Hamilton bonds as a vehicle for long-term savings instead of the local stock though there is good value is local stocks, he said.

Bloomberg Business News Chart shows the Bermuda Stock Exchange index during the past six months.