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OMNI Lists on the JSE; Rallies in First Day of Trading Published: 13 June 2024

  • OMNI Industries Limited (OMNI) successfully listed on the Jamaica Stock Exchange (JSE) Junior Market and began trading under the symbol OMNI, on Tuesday, June 11, 2024. OMNI is the first listing on the Junior Market for 2024.
  • Dr. Marlene Street Forrest, Managing Director of the JSE, stated, “This augur[s] well for the economy and for wealth creation and for long-term investment. Despite the challenging times, OMNI’s 500,000,000 Ordinary Shares were oversubscribed. Its Initial Public Offer (IPO) allowed the Company to raise capital of $500m and to add 2,686 investors to its register of shareholders.”
  • Mr. Patrick Kumst, OMNI’s Managing Director, said, “Looking ahead, our strategic vision is clear. We plan to modernize our operations by upgrading our existing equipment and investing in new more efficient machines. This is not only to enhance our production capacity but also to drive operational efficiencies and cost savings. We are also committed to expanding our product offerings and exploring new markets in the Region.  Innovation and operational excellence are at the heart of our journey.”
  • On its first day of trading, the availability of OMNI’s shares on the Junior Market was met with high demand and trading of OMNI’s shares had to be halted due to the vigorous demand for the stock and an increase in price, which triggered the JSE’s Circuit Breaker Rule.
  • The JSE’s Circuit Breaker Rule is activated when a stock’s price rises above 15% or falls below 15% of its price during the trading day. OMNI began trading at a list price of $1.00 and increased to $1.30 at the end of its first trading day, on Tuesday. This represents a 30% increase in the stock price.

(Source: JSE)

Twin Peaks Regulation Model Implementation Expected by 2026 Published: 13 June 2024

  • Minister of Finance and the Public Service, Dr Nigel Clarke, announced plans for Jamaica's financial sector regulation under the Twin Peaks Model. This model will see the Bank of Jamaica (BOJ) supervising banks and non-bank financial institutions for prudential matters while the Financial Services Commission (FSC) will focus on market conduct and consumer protection.
  • Clarke was speaking during a statement to the House of Representatives on Tuesday (June 11). He said a Twin Peaks Concept Paper, which outlines the legal and operational contours of the model, was prepared and submitted for his approval by the BOJ-FSC Twin Peaks Steering Committee, Chaired by Central Bank Governor, Richard Byles, in 2023
  • “The Concept Paper has been approved and we are now in the final stages of the preparation of a Cabinet Submission for the consideration and approval of Cabinet, following which formal drafting instructions will be issued for the development of the Bill to address proposed changes to the law to give effect to the Twin Peaks Model of Financial Regulation in Jamaica,” the Minister stated.
  • He noted that now, it would be better to focus the limited resources on developing legislation for a comprehensive and robust regulatory framework that the Twin Peaks model will deliver, rather than interim legislation to address consumer protection gaps for financial services.
  • He further noted that given the timelines and urgent need to begin addressing some of the deficiencies identified in the shortest possible time. The Steering Committee proposed that a period of Practice of the Twin Peaks arrangements, within the constraints of the existing statutory provisions, occur before the legal cutover from the current framework to the new model.
  • The Twin Peaks Practice Period is intended to enable capacity building and closer collaboration between the regulators, pending the legislation’s passage, to enable the model’s implementation. In anticipation of the proposed legislative changes, the objective of the practice is to prepare team members for Twin Peaks implementation through opportunities for real-world experience supervising and regulating deposit-taking institutions (DTIs) and non-DTIs, within the constraints of the existing regulatory framework.

(Source: JIS)

Guyana to Strengthen Coastal Resilience and Adaptation Published: 13 June 2024

• The World Bank approved a project to help Guyana adapt to climate change and reduce flood risk in its coastal regions. This initiative is set to benefit around 320,000 people, approximately 40% of the country’s population, including the most vulnerable.
• Guyana is among the most vulnerable countries to climate change. Studies have shown that rising sea levels expose 100% of the country's coastal agriculture and 66.4% of its coastal urban areas to flooding and erosion, with potential GDP exceeding 46.4%.
• The new Coastal Adaptation and Resilience Project, valued at US$45Mn will build on existing efforts to enhance flood risk management in Guyana. The project will repair or replace more than 45 drainage infrastructure assets, focusing on sluices. A Sluice is a sliding gate or device for controlling water flow.
• The project will work closely with Guyana’s Ministry of Agriculture to help it effectively manage and operate the drainage system. It will upgrade the National Drainage and Irrigation Authority's asset management system, develop technical standards for flood risk management in urban areas, and provide training to enhance personnel capacity for system operation and maintenance.
• Adverse climate shocks are key challenges that could negatively impact the Guyanese economy and weaken the macroeconomic outlook. Receiving funding like this from the World Bank, along with funding from the Food and Agriculture Organisation of the United Nations (FAO) toward Climate-Smart Agriculture and Food Systems should boost climate change adaptation while investing steadily in people, physical infrastructure, and institutions.

(Sources: The World Bank Group & NCBCM Research)

Brazil's Rate-Cutting Cycle Could End as Prices Rise in May Published: 13 June 2024

• Consumer prices in Brazil accelerated more than expected in May, data from statistics agency IBGE (the Brazilian Institute of Geography and Statistics) showed on June 11, 2024. A jump in food costs helped drive annual inflation further from the central bank's target.
• Prices as measured by Brazil's benchmark IPCA (the Extended National Consumer Price) index rose 0.46% last month, above the market forecast of 0.42%, according to a Reuters poll of economists, up from the 0.38% increase in April.
• Meanwhile, 12-month inflation in Latin America's largest economy hit 3.93%, up from 3.69% in the previous month and above the expected 3.89%. The statistics agency noted that recent devastating floods in the Rio Grande do Sul, a major farming state, contributed to the rise in food costs and the inflation outturn.
• The data puts the monetary authority's ongoing easing cycle at risk, economists say, with investors pricing in a pause in the rate-cutting process when policymakers meet again later this month.
• In May, Brazil’s central bank cut its benchmark rate by 25 basis points (0.25%) to 10.50% after six reductions twice that size. Board members have voiced concerns about rising inflation expectations for this year and the next. The bank targets a 3% inflation rate, with a tolerance band of plus or minus 1.5 percentage points.

(Source: Reuters)

Fed leaves rates unchanged, sees only one 2024 cut, despite inflation progress Published: 13 June 2024

• The Federal Reserve held interest rates steady on Wednesday and pushed the start of rate cuts to as late as December.
• With growth and unemployment lodged at levels better than the U.S. central bank considers sustainable in the long run, Fed Chair Jerome Powell said policymakers were content to leave rates unchanged until the economy signals that something else is needed. These signals include a more convincing decline in price pressures or a jump in the unemployment rate.
• So far, Powell noted in a press conference after the end of a two-day policy meeting, inflation had fallen without a major blow to the economy, and there was no reason to think that can't go on.
• The result is the Fed expecting a slow decline in inflation back towards its 2% target, with their preferred inflation measure - the personal consumption expenditures (PCE) index - virtually unchanged at the end of this year from its current level and the number of rate cuts held to a single 25 basis point reduction. However, rate cuts are projected to gather pace next year, with Powell deferring on the timing.
• Inflation data published hours before the policy statement release and updated projections showed the consumer price index (CPI) was flat month-over-month (MoM) in May, causing some analysts to argue the latest projections were already "stale."
• Investors in contracts tied to the Fed's benchmark interest rate largely kept bets intact that the central bank would approve quarter-percentage-point reductions in September and December.
• Under the current projections, absent a surprise in upcoming inflation or jobs data, the cuts would likely not begin until December, moving the Fed's decision out of the Nov. 5 U.S. presidential election cycle.

(Source: Reuters)

US Consumer Prices Unchanged in May as Inflation Pressures Abate Published: 13 June 2024

• U.S. consumer prices were unexpectedly unchanged in May, as cheaper gasoline offset higher costs for rental housing. However, inflation likely remains too high for the Federal Reserve to start rate cuts before September against the backdrop of a persistently strong labour market.
• The unchanged reading in the consumer price index last month followed a 0.3% increase in April, the Labor Department's Bureau of Labor Statistics reported. It was the softest reading since July 2022. The CPI has been trending lower since posting solid readings in February and March. Economists polled by Reuters had forecast the CPI would edge up 0.1% in May. Price pressures could continue moderating as major retailers, including Target, slash prices on goods ranging from food to diapers as they seek to lure inflation-weary consumers.
• Last month, gasoline prices dropped 3.6% after increasing 2.8% in April. Food prices edged up 0.1% after being unchanged in April. Prices at the supermarket were unchanged amid a 1.3% drop in milk. There were also decreases in the prices of nonalcoholic beverages. Prices of fruits and vegetables were unchanged.
• However, the cost of rent increased by 0.4%, matching April's rise. In the 12 months through May, the CPI advanced 3.3% after increasing 3.4% in April. Though the annual increase in consumer prices has slowed from a peak of 9.1% in June 2022, inflation continues to run above the Fed's 2% target.

(Source: Reuters)

Jamaica’s Agriculture Ministry to Revitalise Dairy Industry Published: 12 June 2024

• Jamaica’s Ministry of Agriculture, Fisheries, and Mining has launched a comprehensive new program to revitalise the dairy industry and address local and international demand for dairy products. This initiative is expected to usher in a new era of innovation and efficiency in milk production.
• The Dairy Livestock and Innovation Nutrition Programme prominently features the introduction of solar-powered cooling systems. These systems aim to boost energy efficiency and reduce production costs for dairy farmers, marking a transition to more sustainable agricultural methods.
• The Ministry will further improve the industry's technological infrastructure by distributing 15 new mobile milking machines across dairy farming communities. Additionally, the Jamaica Dairy Development Board will initiate a technology center and an equipment lease program.
• Under the initiative there are also plans to expand the local gene pool by importing and distributing cattle embryos and semen, which could significantly boost the quality and quantity of dairy production.
• A total of $56Mn is earmarked to establish new dairy farms at various schools and colleges, enhance existing dairy programs and equip them with modern facilities and equipment.
• With these measures, the Ministry aims to increase annual milk production to 30 million litres by 2030, a significant rise from the 10.6 million litres recorded in 2023. This goal aligns with the broader vision of sustaining the dairy industry’s growth and meeting emerging market needs.

(Source: Caribbean National Weekly)

Imports Up; Exports Down in January Published: 12 June 2024

• Jamaica’s total spending on imports for January 2024 was valued at US$689.5Mn, while total earnings from exports were valued at US$157.1Mn, according to the Statistical Institute of Jamaica (STATIN).
• During the period, import values rose by 16.4% to US$689.5 million, up from US$592.3 million in January 2023. This significant increase was mainly due to higher imports of "Fuels and Lubricants," "Capital Goods (excluding Motor Cars)," "Transport Equipment," and "Consumer Goods," which increased by 53.7%, 30.6%, 30.4%, and 0.8%, respectively.
• In the first month of 2024, total exports were 15.2% lower than the US$185.2 million earned in the corresponding period of 2023. This decline was mainly attributed to a 23.0% reduction in the value of "Mineral Fuels" exports.”
• Domestic exports for January 2024 fell by 11.1% to US$124.7Mn compared to US$140.3Mn for January 2023. There was also a decline in re-exports. which fell by 28.0 % to US$32.3Mn.
• Domestic exports refer to commodities that are grown, extracted, or manufactured in Jamaica, including goods of foreign origin that have been assembled or transformed locally. Conversely, re-exports refer to goods of foreign origin that have not undergone significant transformation while in Jamaica, typically moving out from customs storage or manufacturing warehouses.
• Jamaica’s top five main trading partners from largest to smallest were the United States of America (USA), Brazil, China, Colombia and Japan. Imports of goods from these countries accounted for 64.7% of total imports and valued at US$445.9Mn. This was 16.0% above the US$384.4Mn spent in January 2023. This increase was due largely to higher imports of mineral fuels from Brazil.
• The top five destinations for Jamaica’s exports were the USA, Iceland, the Russian Federation, Puerto Rico and, the United Kingdom. Revenue earned from exports t these countries decreased by 22.6% to US$113.4Mn due to lower alumina exports.
• Overall, this led to a 30.7% increase in the trade deficit, reaching US$532.4 million in January 2024 compared to January 2023.

(Source: STATIN)

FAO and Canada Launch CAD$10Mn Regional Project Published: 12 June 2024

• Farmers and entrepreneurs across 8 Caribbean countries stand to benefit from the new CAD$10Mn Regional Gender-Responsive Climate-Smart Agriculture and Food Systems in the Caribbean project, officially launched on June 3, 2024, at United Nations House in Barbados.
• Funded by the Government of Canada, the 4-year project (2024-2028) will be implemented by the Food and Agriculture Organisation of the United Nations (FAO) in Belize, the Commonwealth of Dominica, Grenada, Guyana, Jamaica, St Lucia, St Vincent and the Grenadines and Suriname.
• A collaborative effort involving Canada, FAO, local government and civil society partners, the project will enhance Caribbean farmers’ resilience to climate change and contribute to economic growth in the region. First announced by Prime Minister Justin Trudeau during the Canada-Caricom Summit in October 2023, the regional project will contribute to improving the livelihoods of women and youth in climate-resilient agriculture value chains in the Caribbean.
• Through the Canada-funded project, FAO will work closely with local Ministries of Agriculture, farmer organisations, gender bureaus, research institutions, and community-based agro-processing centres to transform and upgrade these value chains ensuring that they are market-driven using relevant data and facilitate public-private sector partnerships.
• The project will also increase the use of climate-smart technologies, innovations, and practices by agricultural stakeholders to make more data-driven decisions and advocate for expanding more inclusive, gender-responsive climate-resilient value chains.
• Representatives from regional partner organisations, the Caribbean Community (Caricom) Secretariat and the Organisation of Eastern Caribbean States (OECS), participating in the launch highlighted the project’s significance and its connection to the ‘Caricom 25 by 2025 Initiative’ (i.e. reducing the Region's large food import bill by 25% by 2025) and the 10-year Food and Agricultural Systems Transformation (FAST) Strategy.

(Source: Now Grenada)

World Bank Approves New Project Loan for the Dominican Republic Published: 12 June 2024

• The World Bank has approved a new project to assist the Dominican Republic in promoting key institutional reforms for climate resilience, reduced water, soil, and air pollution, as well as enhanced natural resource protection.
• The Sustainable Development Policy Loan (SDPL) project valued at US$400Mn will support the government’s efforts to strengthen institutional and financing capacity for environmental protection, with important positive effects on public health and the livelihoods of communities involved in tourism and fishing activities.
• “The Dominican Republic, loses the equivalent of 0.4% of its Gross Domestic Product annually due to extreme natural hazards associated with climate change. The World Bank’s support has been and continues to be crucial in achieving our goals of building climate resilience in agriculture, ensuring food security, improving landscape and natural resource management, and addressing the challenges posed by sargassum,” stated Pavel Isa Contreras, Minister of Economy, Planning, and Development.
• The SDPL project aims to enhance the government’s institutional and financial capacity for natural resource protection, climate change adaptation, and mitigation. It will also support marine conservation, reduce air and marine pollution, and strengthen river and water body protection.
• Additionally, the project will help regulate waste management from electrical and electronic equipment and address environmental challenges such as phasing out hydrofluorocarbon substances, thereby lowering greenhouse gas emissions. Furthermore, it will help tackle the sargassum seaweed issue and establish the regulatory framework for issuing green, social, and sustainable bonds.
• Overall, these climate adaptations and mitigation policies should further reduce economic and financial vulnerabilities, boosting inclusive and resilient growth. This, supported by the existing sound fiscal policies and fundamentals of the country should keep Dom Rep’s economic outlook relatively positive over the near to medium term. Real GDP is projected to grow around 4.6% and 4.3% in 2024 and 2025, respectively after growing by an estimated 4.7% in 2023.

(Sources: The World Bank Group & NCBCM Research)