• Dolla Financial Services Limited (Dolla) advises that at a meeting of their Board of Directors held on July 15, 2022, approval was granted for the Company to raise up to J$1Bn in Bonds. 
• The Bonds are to be registered under the FSC Exempt Distribution Guidelines and are to be issued in favour of Accredited Investors as defined in the guidelines or to investors participating via the Minimum Purchase Amount exemption stated in the guidelines, with subscriptions amount of at least J$5Mn and J$10Mn, respectively.
• This follows the company raising J$500Mn through an Initial Public Offer (IPO) which was listed on the Junior market of the JSE on June 14, 2022. The IPO was oversubscribed by approximately 950% which indicates investor interest which the company is seeking to capitalize on. Dolla’s stock price has increased by 227.0% since the IPO and now trades at $3.27 at close of trading on Thursday July 21, 2022.

(Source: JSE News & NCBCM Research)

• The Development Bank of Jamaica (DBJ) is providing $1Bn to bolster the country’s agriculture sector through its new ‘AgriBiz’ facility.
• The programme, launched on Tuesday (July 19) at the Ministry of Agriculture and Fisheries in Kingston, will provide concessional loans for micro, small and medium-sized farmers. Farmers and agribusiness entrepreneurs will be able to access loans of up to $30Mn at 8.75% for up to 10 years.
• The agriculture sector, which currently employs more than 250,000 persons and accounts for 8.68% of gross domestic product (GDP) and foreign exchange, is contributing positively to the country’s recovery from external shocks and should continue on this trajectory through the AgriBiz programme.
• In addition to funding opportunities, the programme will also include technical assistance and financial training for farmers, which will be provided jointly with partners, Agro-Investment Corporation (AIC).
• The programme is intended to boost food security and the agriculture sector’s recovery from the shocks of the COVID-19 pandemic and the Russia-Ukraine war. This is expected to not only contribute to the country’s GDP but also reduce our dependence on other economies, especially in light of food shortages being experienced worldwide.   

(Source: JIS News)

• The Dominican Republic is expected to grow by 4.6% in 2022 and 4.8% in 2023, from 12.3% in 2021, on the back of a stronger than expected Q1 2022 (6.1% y-o-y) owing to the recovery of the tourism sector.
• The latter also supported a 32.2% expansion in exports, while fixed investments grew 8.4% benefitting from increased capital inflows into the tourism sector.
• However, it is expected that elevated inflation and a possible US recession will weigh on private consumption and weaker US growth could dampen investment inflows and external tourism demand. 

(Source: Fitch Solutions)

• The European Central Bank raised interest rates by more than expected on Thursday (July 21), confirming that concerns about runaway inflation now trump growth considerations, even as the euro zone economy reels from the impact of Russia's war in Ukraine.
• The ECB raised its benchmark deposit rate by 50 basis points to 0%, breaking its own guidance for a 25 basis point move as it joined global peers in jacking up borrowing costs. This was the euro zone central bank's first rate hike in 11 years.
• Ending an eight-year experiment with negative interest rates, the ECB also increased its main refinancing rate to 0.50% and promised further rate hikes possibly as soon as its next meeting on Sept. 8.
• With inflation already approaching double-digit territory, it is now at risk of getting entrenched above the ECB's 2% target and any gas shortage over the coming winter is likely to push prices even higher, perpetuating rapid price growth.

(Source: Reuters)

• China’s holdings of U.S. debt have fallen below $1Trn for the first time in 12 years amid rising interest rates that have made treasuries potentially less attractive. Japan is now the leading holder of U.S. debt with $1.2 trillion.
• Continuing a trend that began early in 2021, China’s portfolio of U.S. government debt in May dropped to $980.8Bn, according to Treasury Department data released July 18, 2022. That’s a decline of nearly $23Bn from April and down nearly $100Bn, or 9%, from the year earlier.
• The debt decline comes as the U.S. Federal Reserve has been raising rates to stop inflation from running at its fastest rate since 1981. When rates rise on bonds, prices drop, meaning a capital loss for investors who sell the bonds ahead of maturity. The decline in China’s share also has been attributed to Beijing working to diversify its foreign debt portfolio.

(Source: CNBC)

• Dolla Financial Services Limited (Dolla) reported a net profit of $119.14Mn for the 6 months ended June 30, 2022, which represents a year over year 473.1% improvement over the net profit of $20.79Mn recorded in 2021.
• Bottom-line growth was mainly supported by a 217.6% increase in net interest income due to a significant rise in loan disbursements during the period. This was made possible through an expansion of their loan portfolio which was boosted by the publicity of the IPO.
• It is also noteworthy to mention the decline in the company’s expected credit losses (ECL) to $7.9Mn from $9.3Mn which also supported improved profitability. The reduction in ECL was primarily due to the changes in the company’s loan portfolio, proactive management of delinquency, and a deliberate effort in employing sound risk management to loans.
• Administrative expenses which jumped to $136.60Mn from $69.64Mn due to increases in staff costs and other expenses as a result of a bonus payment to staff, and costs associated with the IPO process, partially depressed the overall positive performance.
• Dolla currently has plans in play which once executed should boost revenues. It intends to open its 9^th branch in Portmore, St Catherine in the Q3 2022. The company is also seeking to expand its footprint in Guyana by stepping outside of Georgetown, to capitalize on the lucrative opportunities arising from the rapidly growing economy.
• In partnership with RTA Biz Energy Partners, Dolla has designed a product that aims to provide its customers with access to financing for alternative energy solutions. Jamaicans can now access up to 80% financing for solar panels, solar water heaters and generators, all supplied and installed by RTA Biz energy. This partnership will simultaneously support the government’s plan to reduce the country’s dependency on fossil fuels and drive interest income for Dolla.
• Dolla’s stock price has increased by 198.0% since listing on June 14. The stock closed Tuesday’s trading session at $2.98 and currently trades at a P/E of 32.7x which is above the Junior Market Financial Sector Average of 14.2x.

(Sources: JSE & NCBCM Research)

• For the period January to March 2022, Jamaica’s total imports increased by 38.7% to value US$1,826.3Mn, while total exports declined to value US$340.5Mn.
• The increase of 38.7% in spending on total imports for January to March 2022, compared to US$1,316.9Mn in 2021, was due largely to higher imports of “Fuels and Lubricants”, “Raw Materials/Intermediate Goods” and “Consumer Goods” which rose by 48.2%, 41.1% and 42.1% respectively.
• Total exports for the review period January to March 2022, were valued at US$340Mn, 5.5% below the US$360.3Mn earned in the similar 2021 period. Domestic exports accounted for 85.3% of total exports and were valued at US$290.5Mn, 5.8% less than the corresponding 2021 period. This was due to the decline in the value of exports from the Mining and Quarrying industry, which decreased by 57.8% to US$51.2Mn.
• The five main trading partners for the period January to March 2022 were the United States of America (USA), China, Brazil, Trinidad and Tobago, and Colombia. Total expenditure on imports from these countries were valued at US$1,199.1Mn. This was due largely to the higher imports of fuel from the USA and crude oil from Brazil. 
• The top five destinations for Jamaica’s exports were the USA, Canada, Puerto Rica, the United Kingdom and Trinidad and Tobago. Exports to these countries increased by 18.3% to US$282.2Mn. This was attributed to higher exports of turbojet A1 fuel to the USA and alumina to Canada.
• The country continues to run a trade deficit which weighs on the country’s GDP, despite growing by 6.4% in the first quarter. The higher level of exports to imports also indicates a greater dependence on other economies which makes it more susceptible to imported inflationary pressures.

(Source: STATIN & NCBCM Research)

• The Caribbean Development Bank (CDB) will launch a new project to be implemented in the Dominican Republic funded by the CARIFORUM-European Union (EU), Economic Partnership Agreement (EPA), CARICOM Single Market and Economy (CSME) and Standby Facility for Capacity Building entitled the “Strengthening the Export Capacity of Agro-Producers” in the Dominican Republic to access the European Union and CARIFORUM Markets on Wednesday, 20 July, 2022.
• The project is being implemented by the ministry of industry, trade and MSMEs, through the vice ministry of foreign trade (VICOMEX) and the Dominican Association of Exporters (ADOEXPO). The two-year initiative provides € 324,806 in technical assistance.
• Through the project, the people of the Dominican Republic will benefit from enhanced access to regional and international markets due to a strengthened sanitary and phytosanitary framework, with the implementation of a robust food traceability and food safety management system.
• By closing these gaps in the trade of agricultural commodities, the project will directly contribute to improving food security, which is one of the most concerning challenges that the region faces. It will also support efforts by the Dominican Republic to reach its individual targets under the United Nations 2030 Agenda for Sustainable Development.

(Source: Caribbean News Global)

• Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on July 21, 2022, after the completion of scheduled maintenance, two sources familiar with the export plans told Reuters.
• The pipeline, which accounts for more than a third of Russian natural gas exports to the European Union, was halted for ten days of annual maintenance on July 11.
• The sources, speaking on condition of anonymity because of the sensitivity of the issue, told Reuters the pipeline was expected to resume operation on time, but at less than its capacity of some 160 million cubic meters (mcm) per day.
• Nord Stream 1, which runs on the bed of the Baltic Sea to Germany, has been in focus since Russia sent troops to Ukraine on Feb. 24 in what Moscow describes as a "special military operation".
• The West has accused Russia, the world's largest gas exporter and second-largest crude oil supplier, of using its energy supplies as a tool of coercion. However, Russia has refuted the accusations, saying it has been a reliable energy supplier.

(Source: Reuters)

• For the month of June, the All-Jamaica Consumer Price Index (CPI) increased by 0.8%. June’s outturn means the monthly CPI has increased further relative to the 0.3% increase witnessed in May. The point-to-point inflation was however stable at 10.9% in the 12 months to June 2022, relative to the May 2022 outturn. This keeps inflation outside the BOJ’s target range of 4% to 6% for the 11th consecutive month.
• For June, this upward movement was impacted primarily by a 1.7% increase in the index for the heaviest weighted division ‘Food and Non-Alcoholic Beverages’ and a 0.9% upward movement in the index for the ‘Transport’ division. The overall movement of the CPI was tempered by the 0.5% decline in the index for the division ‘Housing, Water, Electricity, Gas, Other Fuels’. The decline in the index was influenced by the assistance provided by the government to low and middle income households with 20% of their bill payments.
• The point-to-point inflation rate was mainly influenced by divisions: ‘Food and Non-Alcoholic Beverages’ (13.7%), ‘Transport’ (15.6%) and ‘Restaurants and Accommodation Services’ (22.4%). For the fiscal year-to-date (April 2022- June 2022), the inflation rate was 1.1%.
• The current breach in the inflation range is in keeping with expectations, as the BOJ noted in June 2022, that inflation was projected to successively breach the target over the next two years. Further, while it had projected in May that the rate would likely peak within the range of 12.0% and 15.0% by June 2022, in June it revised its outlook to note that it was possible that inflation would fall below the peak range, which it has.
• While the rate will remain elevated in the short term, it is anticipated that it will decline in the second half of the year as global food prices have been falling as reported by the FAO, and other commodity prices such as oil are expected to fall.
• On August 18^th, 2022, the BOJ will have its next monetary policy meeting at which further policy rate increases will be discussed. The policy rate currently stands at 5.5%, which was made effective on 30 June 2022. Given that the BOJ has noted that the interest rate is closer to the level that it deems appropriate, there may be smaller and less hikes in the future.

(Sources: STATIN & NCBCM Research