Online Banking

Latest News

EU Plans Russian Oil Ban; Ukraine Reports Heavy Eastern Assault Published: 05 May 2022

  •  The European Union proposed its toughest sanctions yet against Russia on Wednesday, including a phased oil embargo, as Moscow pressed an offensive in eastern Ukraine and close Russian ally, Belarus announced large-scale army drills. 
  • Nearly 10 weeks into a war that has killed thousands of people and flattened Ukrainian cities, Russia was intensifying its assault, Ukraine's defence ministry said, with attacks reported on railway stations used to transport Western arms. 
  • A new convoy of buses began evacuating more civilians from the ravaged southeastern port city of Mariupol, which has seen the heaviest fighting of the war so far. Moscow pledged to halt some military operations this week to allow more evacuations. 
  • Piling pressure on Russia's already battered $1.8 trillion economy, Brussels proposed phasing out imports of Russian crude oil within six months and refined products by the end of this year. 
  • The plan, if agreed by all 27 EU governments, would follow U.S. and British oil bans and be a watershed for the world's largest trading bloc, which remains dependent on Russian energy and must find alternative supplies.

(Source: Reuters)

JSE Partners With Ghana Stock Exchange Published: 04 May 2022

  • The Jamaica Stock Exchange (JSE) has entered into a partnership with the Ghana Stock Exchange (GSE), which will see the capital markets of Jamaica and Ghana expanding their products and services to investors in both countries. 
  • This is being facilitated under a Memorandum of Understanding (MOU) of Mutual Recognition, which was signed by representatives of both entities during a special Bell Ringing ceremony on Monday (May 2) at the JSE’s Harbour Street office in Kingston.
  • This partnership is beneficial to both parties as it will strengthen linkages between both countries, provide investors with more options for diversification, and it will also strengthen investor participation among both exchanges. 
  • Managing Director of the JSE, Dr. Marlene Street Forrest highlighted that there are certain commonalities that make the alliance with Ghana ideal, pointing out, for example, that like Jamaica, Ghana has a growing, young, educated middle-class population that has a high demand for goods and services. 
  • Additionally, she expects that over the next several years’ companies globally will set up industries and companies in Africa and the Caribbean, and as such the stock exchange will be perfectly poised to benefit from such an expansion.

(Sources: JIS News and NCBCM)

 

Jamaica Teas Reports lower Net Profit Due to Higher Direct Costs Published: 04 May 2022

  • Jamaica Teas Limited reported a net profit attributable to shareholders of $171.15Mn for its six months ending March 31, 2022, which represents a 13.7% decline relative to the prior year. 
  • The local manufacturing sales segment grew by 22.8%, despite the shortage of inventory items that resulted in lower sales for several products, particularly peppermint products which are in high demand. 
  • However, there was an overall decline in the Group’s operating revenues primarily because of the gain from apartment sales recorded during the same period in 2021, which did not occur this year. The decline in revenues was also influenced by a drop in export sales (3.1%) as higher freight costs diminished demand for some types of products, and an inability to fill orders because of delays in the arrival of imported raw materials. If the gain on the apartment sales is stripped out, the company realized a 5.8% growth in revenues in 2022. 
  • Additionally, though its subsidiary’s (QWI’s) investment portfolio outperformed the local stock market, total gains for the second quarter were 12% below the prior period which would have harmed the Group’s overall earnings. 
  • Despite challenges faced in the first half of the year, there are signs that some of the issues may be abating. In April, export shipments were 39% higher than in Apr 2021 and export shipments for the 7 months to April now exceed the comparable period for last year. 
  • The recovery in the local tourism sector, increasing employment and the reopening of the economy will contribute positively to the company’s performance. However, elevated shipping costs could continue to affect activities. 
  • Jamaica Tea’s stock price has decreased by 1.4% since the start of the calendar year. The stock closed Tuesday’s trading session at $3.76 and currently trades at a P/E of 20.9x. which is marginally above the Junior Market Manufacturing Sector Average of 20.1x

(Sources: Company’s Financials and NCBCM)

Guyana, Exxon Discuss Pipeline To Bring Natgas Ashore – Minister Published: 04 May 2022

  • Natural Resources Minister Vickram Bharrat stated that Guyana has started discussions with Exxon Mobil Corp (XOM.N)to build a more than 120-mile (190-km) natural gas offshore pipeline. 
  • Guyana is trying to build infrastructure, including a gas-fueled power plant, to develop its economy after U.S. oil major Exxon discovered one of the world's largest oil reserves in the last decade. 
  • Of note, power demand in Guyana is forecast to triple in the next five years along with a fast-growing economy. Additionally, investment in the country is also poised to grow exponentially in the coming years following over 30 discoveries by a consortium led by Exxon, which this month has pushed up the country's recoverable resources to 11bn barrels of oil and gas. 
  • However, while the Exxon-led group currently pumps all of the South American country's output since production started in 2019, Guyana is leaning toward offering oil exploration areas outside of Exxon's blocks in a competitive bid, rather than creating a national oil company with partners.

(Source: Reuters)

IMF Eyes Sovereign Debt Exposure Of Region's Banks Published: 04 May 2022

  • The Director of the Western Hemisphere Department at the International Monetary Fund (IMF), Ilan Goldfajn, says the Washington DC-based financial institution is paying close attention to the sovereign debt exposure of regional banks, especially where recent external shocks have significantly stretched public sector balance sheets. 
  • He explains that 'Banks with highly concentrated exposures, mainly where these are systemically important institutions, can complicate recovery efforts if sovereign debt sustainability risks materialize.' Therefore, the risks associated with sovereign debt linkages are best mitigated by governments pursuing sustainable fiscal policies and making use of the available concessional financing opportunities. 
  • Goldfain also noted that it is essential that financial supervisors promptly identify pockets of excessive risk exposures, enforce and/or tighten exposure concentration limits where warranted, and ensure banks' and other financial institutions' loss-absorbing buffers are commensurate to the risks taken. 
  • The Caribbean Community (CARICOM) Secretary-General, Dr. Carla Barnett, said the operationalisation of an integrated country risk management framework, robust enough to strengthen social safety nets, with the capacity to adapt to shocks, will allow the region to 'build back better' following the various 'challenges', including the coronavirus pandemic. 
  • Consequently, the newly established Resilience and Sustainability Trust (RST), combined with the additional financing will help catalyse and support countries in building resilience to external shocks, including climate change and pandemic preparedness, and ensuring sustainable growth.

(Source: Trinidad Express Newspapers)

Job Openings And The Level Of People Quitting Their Jobs Reached Records In March Published: 04 May 2022

  • Employment openings exceeded the level of available workers by 5.6Mn in March while a record number of people quit their jobs, the Labour Department reported Tuesday. The level of job postings hit 11.55Mn for the month, also a fresh record for data that goes back to December 2000, according to the Job Openings and Labour Turnover Survey. That was up 205,000 from February and representative of a job market still historically tight. 
  • At the same time, quits totaled 4.54Mn, an increase of 152,000 from the previous month as the so-called Great Resignation continued. The Covid pandemic era has seen opportunities for workers who feel confident enough to leave their current situations for better employment elsewhere. 
  • The report adds to an inflationary picture that is expected to push the Federal Reserve into a series of aggressive rate hikes, starting with a half-percentage point move Wednesday. 
  • A shortage of labour supply during the pandemic has caused a surge in wages, with average hourly earnings up 5.6% from a year ago in March. Still, that hasn’t kept up with inflation, which has run at an 8.5% pace over the same time period. Supply failed to keep up with demand in March, with the level of new hires declining slightly to 6.74Mn despite the increase in openings. Total separations rose to 6.32Mn, a rise of nearly 4% from February.

(Source: CNBC News)

U.S. Junk Bonds Drop To Lowest In Over Two Years Ahead Of Fed Meeting Published: 04 May 2022

  • The price of a major U.S. junk bond exchange traded fund (ETF) fell to its lowest in over two years this week, as concerns over the impact of a hawkish Federal Reserve on the economy led investors to pull out of riskier assets. BlackRock’s iShares iBoxx $ High Yield Corporate Bond ETF (HYG.P) fell 0.4% to trade $78.23 a share on Monday, Refinitiv data showed - the lowest price since April 2020. 
  • Meanwhile the yield spread on the ICE BofA U.S. High Yield Index, a commonly used benchmark for the junk bond market, rose to 405 basis points on Monday from 393 bps last week, widening to its highest since March 15, when the spread hit a 15-month peak at 421 bp. A widening of the spread of junk bond yields over Treasuries is an indication of risk aversion in financial markets. 
  • U.S. credit markets saw some respite in March, but the relief proved to be short-lived as uncertainty around the U.S. central bank's ability to engineer a soft landing for the economy continues to weigh on risky assets. 
  • The Fed is expected to announce a 50-basis point rate hike this week as well as the launch of quantitative tightening (QT) - the reversal of a bond-buying program aimed at supporting the economy during the pandemic. 
  • Concerns over its tightening monetary policies have led to a sell-off in U.S. Treasuries this year which has also weighed on riskier assets such as U.S. corporate bonds.

(Source: Reuters)

Producer Prices Continued to Rise in March due to Commodity Price Shocks Published: 03 May 2022

  • For March 2022, output prices for producers in the Mining and Quarrying industry increased by 0.7%, which was higher than February’s outturn of 0.5%. The movement was mainly attributed to a 0.7% rise in the index for the major group ‘Bauxite Mining & Alumina Processing’. 
  • Year-to-date, aluminum prices have increased by 7.4% based on data from Markets Insider. The market has been impacted by the substantial increase in energy and raw material costs, growing demand, decline in China’s production capacity, and fears over supply issues following the sanctions against Russia, which placed upward pressure on prices. 
  • The index for the Manufacturing industry also increased by 2.4%. The main contributors to the increase in the index for the Manufacturing industry were the major groups, ‘Refined Petroleum Products’ up by 7.3%, ‘Food, Beverages & Tobacco’ which moved up by 1.4% and ‘Wood and Wood Products and Furniture’ up by 0.9%’. Along with the other industries the manufacturing industry continues to be adversely affected by higher costs for shipping and raw materials on the international market owing to both the lingering effects of the pandemic and the current geopolitical tensions between Russia-Ukraine. 
  • These March outturns contributed to a 12-month point-to-point (March 2021 – March 2022) increase in both the Mining & Quarrying and Manufacturing industry indices of 35.9% and 22.0%, respectively. It is anticipated that these indices will rise further in the near term as the Russia-Ukraine conflict and its impact on commodity prices continue to unfold.

(Sources: STATIN & NCBCM Research)

Caribbean Assurance Brokers Limited sees bottom-line recovery Published: 03 May 2022

  • Caribbean Assurance Brokers Limited (CAB) reported a net profit of JMD $1.81Mn for its first quarter ended March 31, 2022, which represents a significant improvement from the net loss of JMD$7.88Mn in the prior period last year. 
  • This performance mainly resulted from a 20.7% and 17.3% increase in revenue and other income. This revenue outturn was mainly attributable to growth in its international insurance division, specifically, its Individual Life Division which saw an increase of 33.0%. Furthermore, the company would have seen a reduction in its finance cost of 27.6% as it paid down its existing mortgage loan. 
  • The improvements in income outweighed the 3.7% and 19.4% increase in administrative and selling expenses. The growth in total expenses included professional fees, audit fees, repairs and maintenance, as well as staff-related costs. 
  • Going forward, management expects that the company’s performance will improve supported by the economy reverting to some level of normalcy, and its implementation of new sales processes and the addition of new talent in preparation for continued growth in demand. 
  • CAB’s stock price has increased by 10.05% since the start of the calendar year. The stock closed Monday’s trading session at $2.50 and currently trades at a P/E of 9.3x which is below the Junior Market Financial Sector Average of 12.3x. 

Sources: JSE & NCBCM Research)

Q122 Real GDP Data Underlines Slow Growth Recovery In Mexico Published: 03 May 2022

  • Fitch maintains their 2022 real GDP growth forecast for Mexico at 1.8%, as Q1 2022 preliminary data showed only a slow recovery from a weak performance in H2 2021.  
  • The Q1 2022 data, however; is generally in line with the Agency’s view that the Mexican growth will struggle to gain momentum in 2022, weighed down by high inflation, rising interest rates, and relatively weak investor confidence. As such, inflation is expected to average 7.2% y-o-y in 2022, the highest level since 2000, as higher commodity prices due to the war in Ukraine compound pre-existing price pressures. 
  • Further, higher price growth will eat away at household income and reduce consumer confidence. That said, after 250 basis points worth of rate hikes since June 2021, the Banco de México (Banxico) will likely respond with additional monetary tightening, which will weigh on lending. 
  • Fitch anticipates investor confidence will remain subdued, given concerns about policy direction under President Andrés Manuel López Obrador (AMLO), compounding the impact of higher borrowing costs on investment. 
  • Notably, high inflation and interest rates, weak investor sentiment, and somewhat weaker US demand for exports will cap growth in the quarters ahead. However; a number of factors including strong remittances, the ongoing re-opening from the pandemic, and increased crude exports will prevent a steeper decline in growth.

(Source: Fitch Solutions)