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Ongoing Spread of Covid-19 Poses Risks To Social Stability, Fiscal Consolidation In T&T Published: 23 September 2021

  • The continued spread of COVID-19 in Trinidad & Tobago (T&T) will keep unemployment elevated in the coming months, raising risks to social stability and weakening the popularity of the ruling, centre-left People’s National Movement (PNM). 
  • Fitch Solutions has revised down T&T’s score in its Short-Term Political Risk Index (STPRI) to 60.8 out of 100, from 61.5, due to the growing risks to social stability in the months ahead. 
  • Moreover, Fitch sees increased risks to the PNM’s goal of enacting fiscal consolidation in the medium term, as austerity measures would likely further undermine the party’s public standing and potentially provoke public protests against these reforms.

(Source: Fitch Solutions)

US Fed Signals Tapering is on the Horizon Published: 23 September 2021

  • On September 22, the US Federal Reserve kept its benchmark rate at 0-0.25%, and Fitch Solutions expects it will remain at this level until 2023. However, the Fed made two signals that policy changes are approaching. 
  • Firstly, the Federal Open Market Committee (FOMC) stated that "a moderation in the pace of asset purchases may soon be warranted." Secondly, according to an accompanying 'dot plot' of FOMC member's projections, half of participants (nine) now expect interest rate increases will commence in 2022, up from seven in the June meeting. 
  • Fitch anticipated an announcement that the Fed is preparing to taper its asset purchases, as did markets, given persistent inflationary pressure, a rebound in growth and broad financial market stability. Over recent months, the Fed has pursued a cautious communication strategy regarding its asset purchases in order to manage market expectations and avoid a 'taper tantrum', a goal it appears to have achieved. 
  • In his remarks following the policy decision, Fed Chairman Jay Powell stated that policymakers broadly expect a gradual tapering that concludes by the middle of 2022 and reiterated that the timing of interest rate hikes is not directly tied to the reduction in asset purchases. As such, Fitch maintains a neutral outlook for fixed income markets and does not expect a sudden and sharp rise in yields.

(Source: Fitch Solutions)

U.S. FDA Clears Pfizer COVID-19 Booster for Older and At-risk Americans Published: 23 September 2021

  • The U.S. Food and Drug Administration on Wednesday authorize a booster dose of the Pfizer Inc and BioNTech COVID-19 vaccine for those 65 and older, all people at high risk of severe disease, and others who are regularly exposed to the virus. 
  • The decision paves the way for a quick rollout of the booster shots as soon as this week for millions of people who had their second dose of the vaccine at least six months ago. 
  • The change to the vaccine's emergency use authorization will allow boosters for groups such as health-care workers, teachers and day care staff, grocery workers and those in homeless shelters or prisons, FDA acting Commissioner Janet Woodcock said in a statement. 
  • Pfizer had asked the FDA to expand its vaccine approval to include boosters for all people aged 16 and older and presented data last week to an outside FDA panel of advisers that it said showed waning immunity over time. 
  • The panel voted against the proposition that boosters were needed by everyone but said evidence showed they were helpful to older people and those at high risk.

(Source: Reuters)

Higher Revenues Bolster YoY Growth in The LAB’s Bottom Line Published: 22 September 2021

  • An increase in revenue has contributed to a 31.9% YoY increase in LAB’s net profit for the nine months ended July 31, 2021; net profit ended the period at $142.18Mn (EPS: $0.15). 
  • Revenue increased by 37.3% YoY, driven by growth in media placement (up 39.4%) and production (up 62.2%). This growth was, however, tempered by a reduction in agency (down 1.8%) during the period. An increase in finance income (+462.2%) also supported earnings growth. 
  • The company’s bottom line was however tempered by a 32.6% YoY increase in administration expenses on the back of higher staff costs,  repairs and maintenance of production equipment, depreciation and amortization charges, and lease interest. The increase in staff costs reflects higher work volume. Despite this increase, administrative expenses as a percentage of revenue remain relatively flat at 16.7% compared to 17.3% in the previous period. 
  • The LAB’s stock price has increased 7.8% since the start of the year and closed Tuesday’s trading session at a price of $4.20 per share. At this price, the stock trades at a P/E ratio of 19.4x earnings.

Source: (The LAB Financials)

Portland JSX Reports YoY Earnings Growth Published: 22 September 2021

  • For the Three Months ended May 31, 2021, Portland JSX Limited reported a net profit of US$354,598 relative to the US$1.40Mn loss in the corresponding period of the prior year. 
  • The major driver for this earnings result was the US$750,683 recorded for net fair value gains on financial investments relative to a loss of US$1.33Mn in the corresponding period of 2020. On the other hand, net interest income fell 65.2% while the company recorded FX losses of US$43,064 for the period. A 3.2% increase in interest expenses and a 63.1% increase in operating expenses also tempered the improvement in earnings. 
  • Portland JSX Ltd.’s stock price has fallen to $7.03 per share, down 26.0%  since the start of the year. At this price, the stock trades at a P/E ratio of 13.5x earnings, which is below the main market financial sector average.

Source: (PJX Financials)

Trinidad & Tobago Recovery To Extend Into 2022 On Strength Of Exports, Private Consumption Published: 22 September 2021

  • Between 2021-22, Trinidad & Tobago (T&T) will experience consecutive years of real GDP growth for the first time since 2012-13 amid sustained demand for energy exports and recovering private consumption. 
  • However, Fitch Solutions has revised its 2021 real GDP growth forecast to 3.4%, from 4.4% previously, as a Q221 COVID-19 outbreak delayed the rebound in private consumption. In contrast, the agency has revised its 2022 forecast upwards to 2.5%, from 2.0%, as Fitch expects vaccinations to strengthen consumption in the quarters ahead. 
  • Risks to Fitch’s 2022 forecast are weighted to the downside as economic growth in developed markets has likely peaked, which could undermine demand for energy exports in the quarters ahead.

 

(Source: Fitch Solutions)

AMLO Appears An Early Favourite To Win Recall Vote In March 2022 Published: 22 September 2021

  • In the coming weeks, Mexico’s Congress is likely to pass the necessary legislation to hold a recall referendum in March 2022, in which voters will decide if President Andrés Manuel López Obrador (AMLO) should serve the rest of his term through September 2024. 
  • Fitch Solutions believes that AMLO is a favourite to win the vote, based on available polling and background conditions such as a recovering economy and growing COVID-19 vaccinations. 
  • However, if AMLO does lose the vote, the country would likely face a prolonged period of uncertainty and gridlock as all parties wait for the July 2024 general elections.

(Source: Fitch Solutions)

UK inflation expectations show a record jump in September Published: 22 September 2021

  • The British public's expectations for inflation over the coming year have shot up by a record amount this month, raising the risk that the Bank of England will send a hawkish message soon, Citi said on Tuesday. 
  • The monthly inflation expectations survey showed that public inflation expectations for the next 12 months jumped to 4.1% in September from 3.1% in August, the biggest monthly increase since the survey began more than 15 years ago. 
  • Longer-term inflation expectations for the next five to 10 years rose to 3.8% in September from 3.5% in August. “Today’s data, especially the movement in long-term expectations, suggest growing risks to inflation expectations could become de-anchored to the upside. The sharp increase risks a hawkish response from the (Monetary Policy Committee) this week," Citi said. 
  • Financial markets expect the BoE to start raising interest rates early next year, possibly as soon as February, though most economists think a move will only come towards the end of 2022.

(Source: Reuters)

S&P 500 Ends Lower as China-led Global Growth Worries Persist; Fed Eyed Published: 22 September 2021

  • The S&P 500 slipped Tuesday, as an intraday rebound faded amid slowing global growth worries and difficulties in China ahead of the Federal Reserve monetary policy decision due Wednesday.  
  • The S&P 500 fell 0.1%, the Dow Jones Industrial Average slipped 0.15% or 50 points, the Nasdaq added 0.2%. 
  • Cyclical sectors including energy and consumer discretionary recovered some losses from Monday’s rout, but gains were kept in check by concerns about a potential economic crisis in China, and the wider implications for global growth, as beleaguered real estate giant Evergrande, is unlikely to receive a government bailout.

(Source:Investing.com)

MSMEs Impacted by COVID-19 To Benefit from $3Bn In Loans And Grants Published: 21 September 2021

  • Micro, small and medium-sized enterprises (MSMEs) affected by the COVID-19 pandemic are to benefit from $3.0Bn in loans and grant support through partnership between the Ministry of Finance and the Public Service and the Development Bank of Jamaica (DBJ). Three newly created products are being provided to MSMEs under the programme – MSME recovery loan facility; Go-Digital loan facility; and a Go-Digital Grant. 
  • Under the DBJ’s Social and Economic Recovery and Vaccine (SERVE) Jamaica Programme, the entities will have access to funds to digitise their operations to better serve clients as well as recover from the economic fallout that has affected their cash flows. 
  • Finance Minister, Dr. the Hon. Nigel Clarke, explained that the $2.0Bn MSME recovery loan facility will allow entities to access up to $10.0Mn at a rate of 5.0%. He noted that this loan can be used to address cash-flow deficiencies and refinance existing debt that might be too onerous for entities to undertake at this time. 
  • In addition, the $1.0Bn Go-Digital loan facility should allow businesses to transform their operations by acquiring the appropriate software that allows them to handle their customer, human resource or accounting needs and, therefore, position them in a more resilient position to face this pandemic.

(Source: JIS News)