• Knutsford Express Services Limited reported a turnaround in its bottom-line recording a net profit of $77.83Mn for its financial year ended May 31, 2022, which is a vast improvement from the net loss of $95.98Mn in the prior period last year.
• Travel recovery and removal of mobility restrictions were the main contributing factors to the company’s profitability. Its revenues increased by 76.9% or $484.20Mn, which outpaced the 40.8% or $279.81Mn increase in Administrative and General expenses.
• Prospects for earnings growth for KEX are also favourable. KEX is expected to see a strong first quarter for its FY2022/2023 as Jamaica would have seen a record amount of tourist stopover arrivals which is a key revenue driver for the company. This trend is expected to continue throughout the remainder of 2022 into 2023 and is anticipated to support KEX’s growth. However, we do note that high fuel cost represents a downside risk to KEX’s performance.
• KEX’s stock price has decreased by 15.9% since the start of the calendar year. The stock closed Wednesday’s trading session at $7.00 and currently trades at a P/E of 31.8x which is above the Junior Market Other Average of 20.3x.

(Sources: JSE and NCBCM Research)

• After the Banco Central de Reserva del Perù (BCRP) hiked by 25 basis points at its September 8 meeting, from 6.50% to 6.75%, Fitch now forecasts the central bank will raise its policy rate to 7.00% by end-2022. This is up from Fitch’s previous forecast of 6.75%.
• While this decision was in line with the Agency’s expectations, Fitch now forecasts the BCRP to hike once more at its next meeting in October, rather than ending its hiking cycle in September. Importantly, forward-looking expectations for inflation remain well above the central bank’s 1.0%-3.0% target, and Peru’s growth outlook has become more upbeat, giving the central bank room to tighten monetary policy further.
• While inflation expectations have come in modestly in recent months, lingering supply chain issues and the ongoing Russia-Ukraine conflict will likely prevent inflation from falling more rapidly. Overall, inflation is forecasted to fall from 8.4% y-o-y in August to 7.4% by end-2022. Given that it will remain elevated, it is anticipated that the BCRP will hike further to nudge expectations closer to the inflation target.
• Fitch now expects that the BCRP will opt to keep rates higher in 2023 to reinforce inflation's downward trend towards its inflation target. Inflation will continue to ease by end-2023 to 3.9%, as commodity prices moderate, supply chain pressures ease and base effects become more favourable, prompting the BCRP to begin to lower its policy rate.
• However, risks to Fitch’s interest rate and inflation forecasts remain to the upside, as high inflation, a more aggressive US Federal Reserve and ongoing political uncertainty surrounding President Pedro Castillo could see the BCRP hike further.

(Source: Fitch Solutions)

• The governor of the Central Bank (BCRD), Héctor Valdez Albizu, specified that foreign exchange earnings from tourism reached US$5,759.1Mn in January-August 2022.
• Together with the inflow of US$6,518.8Mn from remittances in the said period, these FX earnings contribute significantly to maintaining a sustainable balance in the current account of the balance of payments and to maintaining exchange rate stability, an essential element for generating certainty in economic agents.
• He added that 31% of foreign direct investment (FDI) in 2021, or some US$960 million, went mainly to the expansion and remodelling of tourism infrastructure. An expected investment value of close to US$1 billion for this concept is anticipated to be made within that sector by the end of 2022.
• Notably, the hotel and restaurant sector has made the most significant contribution to the growth of DR’s economy this year, thus becoming a backbone of the excellent recovery process that the country is experiencing after the pandemic and the effects of the current war in Ukraine.

(Source: Dominican Today)

• Mortgage demand appears to have nowhere to go but down, as interest rates go up. Application volume dropped 1.2% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The week’s results include an adjustment for the observance of Labour Day. Since last year, homebuyers’ demand for mortgages has fallen by nearly a third.
• Mortgage rates, which had been easing slightly through July and August, pushed higher yet again after Federal Reserve Chairman Jerome Powell made it clear to investors that the central bank would stay tough on inflation, even if it caused consumers some pain.
• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.01% from 5.94% for loans with a 20% down payment.
• Refinance demand fell another 4% for the week and was 83% lower than the same week one year ago. With rates above 6%, only about 452,000 borrowers could benefit from a refinancing, according to Black Knight, a mortgage technology and data provider. That is the lowest number on record.

(Source: CNBC)

• China's central bank is widely expected to pause its monetary easing efforts and keep the medium-term policy rate steady this month, a Reuters survey showed, as widening policy divergence with the Federal Reserve could put further pressure on the Chinese yuan and risk capital outflows.
• The People's Bank of China (PBOC) surprised markets in August by lowering key interest rates to revive credit demand and prop up a slowing economy hurt by COVID-19 shocks.
• But the policy divergence with most other major economies, which are raising interest rates aggressively to combat high inflation, has pressured the yuan, which fell more than 3% against the dollar since mid-August to near the psychologically important ¥7 mark.
• Xie, along with some market traders, noted that inflationary pressures in China were very low by global standards, allowing the PBOC more room to manoeuvre on monetary policy if needed.

(Source: Reuters)

• For the nine months ending July 31, 2022, Indies Pharma reported a net profit of $187.71Mn which represents an increase of 81.2% relative to the corresponding period last year.  This surge in profits was mostly attributed to an increase in product sales as revenues increased by 14.9% or $94.34Mn.
• In addition to product sales, the company was able to contain its direct expenses as its cost of sales decreased by 9.8%, which led to a material increase in its gross profit margin moving from 63% in July 2021 to 71% in July 2022. Management has highlighted that one of the main contributing factors to a decrease in its direct expenses was the robust approach taken in monitoring the inventory and supply chains.
• The strong growth experienced for much of Indies’ financial year is expected to carry throughout the company’s final quarter. Already the company would have surpassed its 2021 Financial year net profit figure and as such its 4^th quarter is expected to boost its earnings further.
• Indies Pharma’s stock price has decreased by 7.3% since the start of the calendar year. The stock closed Tuesday’s trading session at $3.08 and currently trades at a P/E of 16.2x which is below the Junior Market Distribution Sector Average of 18.4x.

(Source: JSE)

• The Minister of Agriculture, Limber Cruz, has highlighted that the prices of basic products of the family basket recorded a decrease and estimates that for the coming months will continue to fall because the country has a high food production to supply needs nationwide.
• Limber assured that production in the agricultural sector has doubled, especially that which is carried out in controlled environments. He detailed that among the foods that have increased their production the carrot, with an increase in the harvest of 7.3%, potato by 7.5%, and banana by 11.8%. Meanwhile, chicken production increased from 600,000 per unit per month to 20 million, which has reduced the cost per pound in the different stores.
• According to the minister, the country’s high production of agricultural food is due to the direct subsidy for that sector, which seeks to impact producers so that they can acquire the necessary inputs to raise their production.
• Notably, a representative of the Food and Agriculture Organization of the United Nations (FAO) in the Dominican Republic warned that food prices will reflect increases in 2023, however, due to the impact of the war in Ukraine, the area from where a good portion of the fertilizers used in the world’s agricultural activity comes from.

(Source: Dominican Today)

• Barbadian Prime Minister Mia Mottley said on Friday that her government will enter another International Monetary Fund (IMF) programme to raise US$340 million in financial assistance.
• PM Mottley also indicated that she has signed a letter to IMF Managing Director Kristalina Georgieva asking for “discussions and negotiations” to resume.
• The island’s current arrangement with the IMF – a US$290 million Extended Fund Facility (EFF), which supports the Barbados Economic Recovery and Transformation (BERT) plan – ends September 30.
• Mottley noted that a new EFF will allow the government access to US$130 million and will also unlock access to a new funding facility that the IMF has recently established.
• “I am referring to the Resilience & Sustainability Trust, which will make available to us another 150% of quota and probably in the vicinity of US$200 million to US$210 million on top of the US$130 million that we hope to negotiate.” She said the government will be seeking to negotiate a three-year agreement.

(Source: CARICOM TODAY)

• Inflation rose more than expected in August as rising shelter and food costs offset a drop in gas prices, the Bureau of Labour Statistics reported Tuesday.
• The consumer price index, which tracks a broad swath of goods and services, increased 0.1% for the month and 8.3% over the past year. Excluding volatile food and energy costs, CPI rose 0.6% from July and 6.3% from the same month in 2021.
• Economists had been expecting headline inflation to fall 0.1% and core to increase 0.3%, according to Dow Jones estimates. The respective year-over-year forecasts were for 8% and 6% gains. Energy prices fell 5% for the month, led by a 10.6% slide in the gasoline index. However, those declines were offset by increases elsewhere. The food index increased 0.8% in August and shelter costs, which make up about one-third of the weighting in the CPI, jumped 0.7% and are up 6.2% from a year ago.
• Markets had been widely expecting the Fed to enact a 0.75 percentage point rate increase at its meeting next week. Following the CPI release, traders took the possibility of a half-point move completely off the table and even were pricing in a 10% chance of a full percentage point hike.

(Source: CNBC

• The United States is considering options for a sanctions package against China to deter it from invading Taiwan, with the European Union coming under diplomatic pressure from Taipei to do the same, according to sources familiar with the discussions.
• The sources said the deliberations in Washington and Taipei's separate lobbying of EU envoys were both at an early stage - a response to fears of a Chinese invasion that have grown as military tensions escalate in the Taiwan Strait.
• In both cases, the idea is to take sanctions beyond measures already taken in the West to restrict some trade and investment with China in sensitive technologies like computer chips and telecom equipment. 
• The sources did not provide any details of what is being considered but the notion of sanctions on the world's second-largest economy and one of the global supply chain's biggest links raises questions of feasibility.
• China claims Taiwan as its own territory and last month fired missiles over the island and sailed warships across their unofficial sea frontier after U.S. House of Representatives Speaker Nancy Pelosi visited Taipei in what Beijing saw as a provocation.
• Chinese President Xi Jinping has vowed to bring democratically-governed Taiwan under Beijing's control and has not ruled out the use of force. He is set to secure a third, five-year leadership term at a Communist Party congress next month. Taiwan's government strongly rejects China's sovereignty claims.

(Source Reuters