• Switzerland's radical pledge to bankroll Credit Suisse Group AG has won the embattled lender the chance to resurrect itself from an almost complete collapse in confidence that rattled global markets.
• The move, tantamount to a blank cheque from one of the globe's leading central banks, is reminiscent of the promise by European Central Bank to do whatever it takes to support the euro during the financial crash more than a decade ago.
• In the years that followed, the ECB and other central banks printed billions of euros, a free-money era that spawned a global rally in asset prices. A reversal of low rates to stem rampant inflation has forced a risk rethink and exposed the vulnerability of firms such as Credit Suisse.
• The Swiss National Bank and the country's financial regulator, FINMA, in a joint statement on Wednesday night sought to draw a line under months of speculation about the bank's future that had culminated in a 30% drop in its stock price on Wednesday.
• In the early hours of Thursday, Credit Suisse said it was taking "decisive action" to strengthen its liquidity by exercising its option to borrow from the Swiss National Bank up to 50 billion Swiss francs ($54 billion).
• The move to support the group is designed to stem a crisis of confidence in Switzerland's second-biggest lender resulting from years of scandals and losses. It is one step short of a fully-fledged bailout like those seen during the financial crash more than a decade ago.
• However, it leaves the central bank, which prints the Swiss franc and underpins the Alpine nation's economy, firmly on the hook should confidence in the bank resume its spiral. Meanwhile, Credit Suisse still needs to push ahead with a radical restructuring it undertook in October to restore profitability.
• In their joint statement on Wednesday, the Swiss National Bank and financial regulator said the "current turmoil in the U.S. banking market" would not have any spillover for Switzerland's banks.
• The collapse of Silicon Valley Bank in the U.S. on Friday prompted a widespread flight to quality that saw the bigger lenders that are deemed more solid, including Swiss rival UBS Group AG, attract deposits, deepening Credit Suisse's woes.

(Source: Reuters)

• No new taxes will be introduced to finance the Government’s $1 trillion budget for the upcoming fiscal year. This was announced by Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, as he opened the 2023/24 Budget Debate in the House of Representatives on Tuesday (March 7).
• This is the sixth consecutive fiscal year in which the government has not introduced any new taxes and the eighth year of no new net taxes. Instead, expenditure will be financed with tax and non-tax receipts.
• In terms of new initiatives, Dr. Clarke announced that the Income Tax Act will be amended to incentivise households to purchase solar power generation systems. It will give a 30% tax credit on the cost of these systems up to a maximum cost of $4Mn.
• Whilst the loss in potential revenues from the implementation of this measure was estimated at $100 million, the Minister posited that the potential losses would be offset by positive socio-economic gains, including environmental gains from reducing carbon dioxide emissions, diversifying local energy supply and reducing the demand for crude oil.
• Given the increasing importance of Environmental, Social and Governance (ESG) concerns locally and internationally, environmental initiatives benefiting the productive sector would also be welcomed. Credits made available to the productive sector for environmental and social initiatives have the potential to be a game-changer in the way that Jamaican companies prioritise environmental and social issues, in keeping with international best practices.

(Source: PWC)

• Considering the disparity that currently exists in GCT treatments in the second-hand car sales market for private individuals versus registered GCT taxpayers (such as car dealers), the Minister of Finance will be implementing an initiative in the new fiscal year to remove same.
• The reform will see registered motor vehicle dealers paying a rate of 15% general consumption tax (GCT) on the mark-up margin on second-hand car sales, rather than the full price, while sellers continue to pay a flat fee of $12,000 or $18,000.
• This adjustment will reduce the distorted price competition, as well as disincentivise the structuring of off-book sales to avoid taxation, and hence improve compliance and allow TAJ to secure GCT and other taxes on commissions generated by some of these businesses. 

(Source: PWC and JIS News)

• Yet another milestone has been reached to bring the vision of a single electronic identification card for all government and business transactions to reality, as a US$35.4 million contract was signed between Germany-based company, Veridos and the Government of Guyana on Friday, March 10.
• The implementation of the single electronic identification card allows for the issuance of work permits and resident identification through a more coordinated approach that will see holders of the registration numbers using that single identification for all transactions, President Dr Irfaan Ali said during a simple signing ceremony at State House.
• He stated that the enhancement is necessary due to the immediate need to implement a robust national identity management system that focuses on the integration of identification services across government agencies, security, ease of use, and acquisition of IDs.
• The government embarked on this process in October 2021; and sought the support of the United Arab Emirates. Since then, two companies submitted prototypes which were assessed by technical teams from Guyana’s National Data Management Authority (NDMA) and the Office of the National Information and Communications Technology (ICT).
• In the Head of State’s view, the card will enhance the ease of transactions and be one of the most technologically advanced systems. The President explained that the new electronic identification system would revolutionize how business is done in Guyana and, with its advanced security system, will eliminate the need for certain documents.
• As an example, the banking sector would now have fingerprint verification and validation of its clients, thereby eliminating the need for proof of address and all other audit documentation.
• The cost of doing business, effectiveness, competitiveness, and efficiency is all set to improve as a result of this technology through the introduction of e-health, e-education, e-security, e-agriculture, electronic permit, and license processing, among other areas.

(Source: CariCris)

• The Bahamas Petroleum Dealers Association has requested the government to authorize a marginal increase in fuel prices for retailers, who have been advocating for an increase in their profit margins on fuel, but Economy Minister Michael Halkitis rejected those claims.
• Fuel retailers have called on Halkitis to have “a change of heart” and are also threatening to take action to prompt the authorities to react, arguing that the increase in costs has made the current margin regime unsustainable. The Association said that retailers “don’t want to strike,” but the local media reported that last week they discussed possible actions to call the government’s attention.
• Currently, the government collects some $1.70 per gallon of fuel sold in the Bahamas (customs duty plus VAT plus special fuel contribution). Retailers get a $0.54 per gallon margin. That margin was last adjusted in 2011 when it was at $0.44 per gallon. Wholesalers receive $0.34 per gallon.
• Halkitis stated that while the Davis administration is “sympathetic” to the issues raised by the retailers’ association, the government is not willing to endorse any measure that would lead to immediate increases in fuel prices at the pump.
• Last year, Halkitis acknowledged that the government had discussions with retailers about shifting from a fixed contribution regime to an ad-valorem tax based on a percentage of base fuel price. The Association has indicated that it is open to those conversations. If there is no progress in the negotiations, a strike cannot be ruled out.
• The potential of a strike could morph into broader social unrest, due to the effect of it possibly lowering output due to fuel shortages causing a decrease in business deliveries.

(Source: Oppenheimer & Co. Inc.)

• Bank stocks around the world plunged on Monday even as President Joe Biden vowed to take whatever action was needed to ensure the safety of the U.S. banking system after the sudden collapse of Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O).
• Biden's efforts to reassure markets and depositors came after emergency measures by the United States to guarantee deposits at both banks failed to dispel investor worries about potential contagion to other lenders worldwide. Major U.S. banks lost more than $70 billion in stock market value on Monday, bringing their total loss over the past three days to about $170 billion.
• SVB's customers will have access to all their deposits from Monday and regulators set up a new facility to give banks access to emergency funds that the Federal Reserve made it easier for banks to borrow from it in emergencies.
• SVB Financial Group (SIVB.O) and two top executives were sued on Monday by shareholders, who accused them of concealing how rising interest rates would leave its Silicon Valley Bank unit "particularly susceptible" to a bank run. The proposed class action against SVB, Chief Executive Greg Becker, and Chief Financial Officer Daniel Beck was filed in the San Jose, California, federal court.
• A furious race to re-price interest rate expectations also sent waves through markets as investors bet the Fed will be reluctant to hike next week. Traders currently see a 50% chance of no rate hike at that meeting, with rate cuts priced in for the second half of the year. Early last week a 25 basis point hike was fully priced in, with a 70% chance seen of 50 basis points.

(Source: Reuters)

• HSBC (HSBA.L) bought the UK arm of Silicon Valley Bank for a symbolic one pound on Monday, rescuing a key lender for technology start-ups in Britain, as the biggest bank collapse since the financial crash continued to roil markets.
• The deal, which sees one of the world's biggest banks, with $2.9 trillion of assets, take the doomed British arm of the tech lender under its wing, brought to an end frantic weekend talks between the government, regulators, and prospective buyers. It came after U.S. authorities moved on Sunday to shore up deposits and try to stem any wider contagion from the sudden collapse of its parent Silicon Valley Bank (SIVB.O).
• However, a global rout in stocks continued on Monday, with European banks (.SX7P) shedding as much as 6% on the day. That left them on track for their worst two-day drop since the Ukraine war began in February 2022. HSBC shares were down 3.8%.
• "HSBC is Europe's largest bank, and SVB UK customers should feel reassured by the strength, safety, and security that brings them," Britain's finance minister Jeremy Hunt said.
• The Bank of England said it had organised the sale to underpin confidence in the financial system and minimise any fallout for British technology firms. It said deposits at the bank were safe as a result of the sale and that the wider banking system was safe.

(Source: Reuters)

• Jamaica Producer Group Limited (JP) has recorded a 24.6% yoy increase in net profit attributable to shareholders of $2.30Bn for the financial year ending December 31, 2022.
• Revenue for the year was up by 15.9% yoy to $29.00Bn and is largely attributed to increases in revenues from the Food and Drink division (F&D division). The F&D division revenues experienced a 15.6% yoy increase, while revenues from the Logistics and Infrastructure Division (L&I division) increased by 16.3%.
• This was, however, tempered by a 25.2% increase in ‘selling, administration, and other operating expenses’ compared to the $3.45Bn recorded in FY 2021 and was mainly driven by a 23.0% increase in staff costs to $1.79Bn.
• In November 2022, JP entered into an agreement with PanJam Investment Limited that will see JP transferring its core operating businesses to PanJam in exchange for a 34.5% interest in PanJam. The combined strength of the two enterprises operating as one will enhance shareholder returns through further diversification and a stronger platform for organic and acquisition-led growth.
• Together, PanJam and Jamaica Producers will be a true conglomerate with investments in agriculture, financial services, hospitality, logistics, real estate, shipping, specialty food and drink, and tourist attractions located in the Caribbean, Central, and North America, and Europe.
• JP’s stock price has increased by 2.9% since the start of the calendar year. The stock closed Wednesday’s trading session at $22.59 and currently trades at a P/E of 11.0x, above the Main Market Conglomerate Sector Average of 10.6x.

(Sources: JSE & NCBCM Research)

• The amount of cargo passing through the Panama Canal is expected to shrink this fiscal year, the canal's top authority said on Wednesday, with experts warning lower volumes could hurt Panama's economy.
• Canal Administrator Ricaurte Vasquez said the institution forecasts just 500 million tonnes of goods passing through the 50-mile (80-km) trans-oceanic waterway in the 2023 fiscal year, some 10.3 million less than the previous forecast.
• Vasquez blamed the slowdown in part on Russia's war in Ukraine, fears of a global recession and lower commercial activity in China.
• The canal is losing out on traffic from ships that once carried fuel and gas from the U.S. to Asia, but now go to Europe and bypass the Panama Canal, Vasquez said at a conference.
• "We are losing approximately two daily transits of the liquefied natural gas (LNG) vessels. We have partially compensated for this drop with higher prices," Vasquez said.
• The number of tonnes passing through the canal reached 518 million in 2022 and 516 million in 2021, according to official data.
• Nicolas Vukelja, former president of Panama's maritime chamber, told Reuters the cargo will decrease around 4% compared to the entity's best years, which is "worrying" for the canal's income.
• "This is going to affect the economy of our country," Edgar Urrutia, president of the Logistics Business Council, told Reuters, adding the canal's additions to government coffers will decrease.

(Source: Reuters)

• Climate change could cost Latin America nearly a fifth of its gross domestic product (GDP) by the end of the century without new policies to curb its impact, according to a Moody's Analytics report published Monday.
• The analysis examined three possible scenarios for the region, accounting for the costs of climate change's physical toll (infrastructure damage, poorer health) as well as the costs of policy interventions aimed at reducing climate change.
• Latin America's economic output sustained losses under all three scenarios analyzed, namely, immediate policy actions targeting zero emissions by 2050, policies delayed until 2030 but then picking up pace, and no new policies to curb climate change.
• If no new policy action is taken, Moody's foresees a steady deterioration in GDP, estimating a loss of 10% by 2075 of the regions GDP, and ending the century with an economic decline of 16% as the region loses production capacity starting this year, and losses mount at increasing rates. Under a late policy scenario, Moody's sees output sinking more than 6% lower before recovering to a loss of 5% by 2080.
• "Latin American countries that would be more affected by climate change are the main fossil fuel producers and consumers: Venezuela, Colombia, Brazil, and Mexico," the report said. This is primarily due to the fact that emissions from fossil fuels are said to be the dominant cause of global warming. As a result, the move to cleaner energy will take a huge toll on these producers.
• Early policy implementation presented the best-performing scenario as it reported the lowest losses. It is therefore suggested that countries push towards early climate control implementation policies to reduce future economic output losses and lower inflation from less intensive prices and tariffs.

(Source: Reuters)