Latest News

Revenue Gains Will Improve Puerto Rico's Fiscal Position Published: 12 July 2019

  • Puerto Rico is expected to see a substantial improvement in its fiscal account as surging revenues; limited spending increases and an eventual return to international capital markets underpin fiscal consolidation.
  • Fitch estimates a general fund gross revenue growth of 25.2% y-o-y in the fiscal year 2019, which it forecasts will decelerate slightly into FY20 on base effects.
  • Over the long term, risks to the fiscal account forecast include Puerto Rico’s poor demographic profile, as population loss and an ageing population shrinks the tax base and increases demands for social spending.

(Source: Fitch)

Powell Says Fed Has Room to Cut, May Have Kept Policy Too Tight Published: 12 July 2019

  • Markets have a July rate cut from the Federal Reserve as the base case following Chair Jerome Powell’s two-day testimony to Congress.
  • Federal Reserve Chairman Jerome Powell suggested that the central bank has room to ease monetary policy as the tie between the inflation and jobless rates have broken down.
  • “The relationship between unemployment and inflation became weak” about 20 years ago, Powell told the Senate Banking Committee Thursday. “It’s become weaker and weaker and weaker.”
  • Two regional Fed governors are pushing back, with Atlanta’s Raphael Bostic and Richmond’s Thomas Barkin disputing the need for stimulus right now. Each of them cited the Dallas Fed’s trimmed mean measure of inflation which has come in close to 2% in recent months.
  • As neither of them are voting on the FOMC this year, their arguments could well get lost as Powell gets on with being the world’s central banker.

(Source: Bloomberg)

Oil Surplus Makes Surprise Return Despite OPEC Cuts, IEA Says Published: 12 July 2019

  • OPEC and its allies agreed to extend production cuts into 2020 earlier this month, and already the International Energy Agency is saying that they may need to reduce production even more as the market has returned to surplus.
  • The fall-off in global oil demand is only adding to the risks of another glut in the near future.
  • Despite the warnings, crude is trading higher today, with a barrel of West Texas Intermediate for August delivery firmly over $60 as investors are more concerned about the immediate threat of a Barry-induced production shutdown and tensions in the Middle East.

(Source: Bloomberg)

Barita Investments Limited Reports Solid Earnings Growth Published: 09 July 2019

  • For the nine-month period ended June 30, 2019, Barita Investments Limited (BIL) reported an unaudited net profit of $1.43Bn (EPS: $2.26), representing a 690% improvement on the $180.56Mn (EPS: $0.30) reported in 2018.
  • The performance can be attributed to continued growth in revenue through the addition of new business lines, coupled with improvements in traditional revenue sources. In particular, the company experienced a 42.3% increase in net interest income coupled with a 98.0% growth in fees and commissions.
  • Furthermore, there were improvements in all aspects of net operating income which also boosted the bottom-line performance: foreign exchange trading gains showed 106.2% improvement YoY, gain on investment activity moved from $111.60Mn to $1.24Bn, and other income which increased from $871K to $312.19Mn.
  • The stock has fallen 15.4% since the start of the calendar year, closing yesterday’s trading session at $45.00 per share. At its current price, the stock now trades at a P/E of 16.07x earnings which is below the Main Market Financial sector average of 18.73x. 

(Source: Barita Investments Limited Financials)

Improved Credit Conditions for Q1 Published: 09 July 2019

  • Overall credit conditions to the private sector during the March 2019 quarter eased, relative to the previous quarter.
  • The easing of credit conditions was fueled by more accommodative price and non-price lending policies applicable to both secured and unsecured lending.
  • For secured loans, lenders reported lower interest rates, lower fees and increased maximum loan-to-value ratios (LTV ratios describe the size of a loan in relation to the value of the property securing the loan).
  • Improved conditions for unsecured loans were evidenced by reports of reduced interest rates, lower fees on credit card and non-credit card loans and increases in credit card limits.

(Source: Bank of Jamaica)

Dominican-US trade tops US$13.90Bn in 2018: official Published: 09 July 2019

  • Dominican Republic-United States trade topped US$13.90Bn during 2018, the National Statistics Office (ONE) affirmed on July 8, 2019.
  • The ONE said that 37.55% (US$5.20 billion) corresponded to Dominican exports to the US, and 62.45% (US$8.70 billion) to Dominican imports from the US.
  • In a statement, ONE director Alexandra Izquierdo stressed the importance of trade between both countries and noted that the United States has historically been Dominican Republic’s main trading partner.

(Source: Dominican Today)

China Eyes Trump's 2020 Strategy for Clues on Trade War Deal Published: 09 July 2019

  • As the U.S. and China prepare to restart trade talks, few in Beijing see a clear pathway to a lasting deal.
  • Pessimism dominated conversations last week with about a dozen bureaucrats, government advisers and researchers in China’s capital following the latest truce between Presidents Donald Trump and Xi Jinping.
  • Most saw Trump’s election strategy as being the paramount factor for whether a deal was possible in the short term.
  • Two schools of thought emerged on Trump’s political calculus.
  • One was that he must deliver a deal on China heading into 2020 to please his base, and would therefore eventually relent to Beijing’s demands. The other was that he would drag things out through the campaign, particularly if the economy and stock market held up since he faced a field of Democrats who basically agree with him on getting tough with China.

 (Source: Bloomberg)

Powell Heads to Congress with Rate Cut in Play, Risk on His Mind Published: 09 July 2019

  • Jerome Powell is likely to leave Federal Reserve interest-rate cuts firmly on the table when he appears before Congress this week, even though the latest U.S. jobs report dialed down the urgency to ease borrowing costs.
  • The Fed chairman, who has been hectored for months by President Donald Trump for not cutting rates, will probably repeat language from the Federal Open Market Committee’s June statement that it will “act as appropriate’’ to sustain the economic expansion -- reinforcing bets the central bank will cut at its July 30-31 meeting.
  • Powell gives his semi-annual monetary policy testimony at 10 a.m. Wednesday before the House Financial Services Committee and a day later to the Senate banking panel. 

 (Source: Bloomberg)

MSMEs to Access Loans at Very Low Interest Rate Published: 04 July 2019

  • Owners of micro, small and medium-sized Enterprises (MSMEs) will soon be able to access loans for their businesses with help from the Government, at 4.75%, one of the lowest interest rates that will be available on the market.
  • This was announced by Minister of State in the Ministry of Industry, Commerce, Agriculture, and Fisheries, Hon. Floyd Green, at a workshop, dubbed: ‘Time for Growth: Unlocking the Power of the SME’, at the Terra Nova All-Suite Hotel in St. Andrew, on Wednesday, July 3.
  • “The Government is now unveiling a new facility. We’re seeking to go to $600Mn [in funds to lend entrepreneurs]. We’re going to start with $400Mn that will be given to the EX-IM Bank to lend in the micro, medium and small enterprise sector, largely focusing on our manufacturers,” he said.
  • Green said local manufacturers have complained that the current interest rates are high, and this is a major reason the Government has looked into offering these loans at special interest rates.

 (Source: JIS)

Barita Investments Limited and Kingston Properties Limited Consider Rights Issues Published: 04 July 2019

  • Barita Investments Limited (BIL) has advised that a meeting of their Board of Directors will be held on Thursday, July 11, 2019, at which the directors will consider and if thought fit, recommend a Rights Issue to BIL’s ordinary stockholders.
  • Kingston Properties Limited (KPREIT) has also advised that their Board of Directors will be considering a Rights Issue at a meeting of the directors on July 11, 2019

(Source: JSE)