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Fair value appreciation on investment property bolsters Pulse’s bottom line Published: 08 May 2020

  • Pulse Investment Ltd. reported unaudited net profit of $728.17Mn (EPS:12¢) for the nine month period ended March 31, 2019, representing a 121.3% (or $399.16Mn) increase relative to the prior year.
  • This outturn was as a result of an increase in fair value appreciation on investment property of 230.6% (or $304.28Mn) as well as a 37.0% (or $127.75Mn) increase in revenues. 
  • The stock has declined 62.5% since the start of the calendar year. Pulse closed Thursday’s trading session at $2.25 and currently trades at a P/E of 4.8x earnings which is below the Main Market average of 15.9x.

 (Source: Pulse Financials)

Framework Being Developed For Regulation Of PSPs Published: 08 May 2020

  • The Bank of Jamaica (BOJ) has commenced work to develop an enabling framework for the regulation of Payment Service Providers (PSPs).
  • This is to facilitate the entities’ designation under the Proceeds of Crime Act (POCA), Deputy Governor in charge of Market Operations and Currency, Natalie Haynes, has said.
  • Additionally, Mr. Byles said that in establishing the Sandbox, the BOJ has joined its regulatory counterparts globally, “in seeking to understand the opportunities that can be presented by financial technology, particularly in the delivery of payment services and consumer protection.”
  • “We view the Sandbox as one of the tools which is helping to respond to the advances in the market where the regulatory paradigm may not move as quickly. The OUR is keen to support the development of innovative products through cooperation with, and participation of the telecommunications sector,” Mr. Hewitt said.

 (Source: JIS)

Coronavirus Pandemic Will Undermine Support For Barbadian PM Mottley Published: 08 May 2020

  • The economic hardship caused by Covid-19 and Barbados’ limited fiscal space to cushion the negative impacts of the disease will reduce public support for Prime Minister Mia Mottley.
  • However, given the Barbados Labour Party’s (BLP) overwhelming majority in the House of Assembly and that the next election is not constitutionally mandated until 2023, Fitch expect Mottley to remain committed to fiscal consolidation.
  • An extended economic downturn poses downside risks to Mottley’s public support and social stability in Barbados.

 (Source: Fitch)

Post Covid-19: Mexico Bears Strong Pull Factors For Manufacturers Published: 08 May 2020

  • The Covid-19 crisis will prompt a sharp downturn in economic activity in Mexico over 2020, with the country's industrial sector being most exposed.
  • Social distancing and movement restrictions will crimp industrial productivity and service sector activity, investment will suffer amid deteriorated sentiment, and exports will contract from a tightening in global demand.
  • As pandemic risks subside, and movement restrictions are eased, Fithc believes that there is greater scope for Mexico’s labour market to recover and benefit from FDI into its automotive industry, as automakers look to bring their supply chains closer to home in order to comply with the US–Mexico–Canada Agreement and reduce their dependence on Chinese manufacturing.
  • This is because Mexico offers an attractive operating environment for automakers, scoring a strong 63.2 out of a possible 100 in our Autos Production Risk/Reward Index, due to its strong industrial policy, ability to manufacture complex goods and its proximity to the US and Canada.
  • Mexico's costs of employment are particularly competitive, having one of the lowest wages and highest levels of productivity in the wider Latin American region.

 (Source: Fitch)

A record 20.5 million jobs were lost in April as unemployment rate jumps to 14.7% Published: 08 May 2020

  • The impact of the coronavirus-induced economic shutdown tore through the U.S. labor market in April at historic levels, slashing 20.5 million workers from nonfarm payrolls and sending the unemployment rate skyrocketing to 14.7%, the Labor Department reported Friday.
  • Both numbers easily smashed post-World War II era records and help reflect the profound damage done through efforts used to combat the virus.
  • Economists surveyed by Dow Jones had been expecting payrolls to shed 21.5 million and the unemployment rate to go to 16%. April’s unemployment rate topped the post-war record 10.8% but was short of the Great Depression high estimated at 24.9%. The financial crisis peak was 10% in October 2009.

 (Source: CNBC)

Oil little changed, but on pace for second straight week of gains Published: 08 May 2020

  • Oil prices gained on Friday as more countries began relaxing restrictions put in place to halt the coronavirus pandemic, raising hopes that demand for crude and its products will start to pick up.
  • Brent crude was up 23 cents, or 0.8%, to trade at $29.70 per barrel, having fallen nearly 1% on Thursday. U.S. oil gained 25 cents, or 0.85%, to trade at $29.70 per barrel, after a decline of nearly 2% in the previous session.
  • On the supply side, North American oil companies are cutting production quicker than OPEC officials and industry analysts expected and are on track to withdraw about 1.7 million barrels per day of output by the end of June.

 (Source: CNBC)

Jamaica “Black Listed” by the EU Published: 07 May 2020

  • In February, the Government of Jamaica had agreed to an Action Plan with the Financial Action Task Force (FATF) to address longstanding deficiencies in Jamaica’s anti-money laundering framework .The process of a Government providing such a national commitment to FATF is generally known as being “grey-listed” by FATF.
  • Despite these deficiencies FATF has primarily focused on countries where the economy’s size is above a certain threshold – having US$5 billion of financial assets using a monetary measure known as M2. In 2019, FATF changed this measure to what is known as M3, which is a broader measure of the economy. This change meant that, for the first time, Jamaica exceeded the US$5 billion threshold, which meant Jamaica would be included in the list of countries that FATF would focus on and monitor, a process known as 'greylisting’.
  • The European Union has a law, passed in the European Parliament, that requires the automatic black-listing of any country that has been grey listed by FATF regardless of the reason. Once a country has been grey-listed by FATF, therefore, a black listing by the European Union is a non-negotiable response.
  • Jamaica has until late 2021 to complete its Action Plan. Once this is done, Jamaica will be removed from FATF’s grey-list and the reversal of the EU’s action will also occur.

 (Source: MOF)

Half Year Earnings Nearly Doubles at Barita Published: 07 May 2020

  • Net profit for the 6 months ending March 31, 2020 totalled $1.01BnMn (EPS: $1.24), up 95.9% relative to $516.71Mn (EPS: $0.68) reported for the corresponding period in 2019.
  • Net operating revenue, which increased 94.6% (or $1.10Bn), was the primary contributing factor to the increase in the bottom line. This was supported by, fees and commissions income, net interest income and gains on investment activities which grew 83.7% (or $346.41Mn), 110.6% (or $283.66Mn) and 39.6% (or $241.26Mn), respectively. Furthermore, the company also benefitted from a FX trading translation gain of $108.64Mn relative to a loss of $138.12Mn in the same period of 2019.
  • The stock has declined 28.2%% since the start of the year, and closed trading at $51.95 on Tuesday. The stock currently trades at a P/E of 17.4x earnings, which is above the Main Market Financial sector average of 13.3x.

 (Source: Barita Financials)

Brazil's central bank suggests more rate cuts to come Published: 07 May 2020

  • The monetary policy committee at Brazil's central bank said it could cut the benchmark Selic interest rate by as much as another 0.75% at its next meeting in June "to counteract the economic consequences of the COVID-19 pandemic."
  • The committee, known as Copom, unanimously voted to lower the Selic by 0.75 basis points to 3%, a record low, on Wednesday, concluding that the economic slump calls for "an unusually large monetary stimulus,"
  • Meanwhile, inflation could fall short of the target range if the economy remains sluggish for a prolonged period, but it could rise above expectations if the government's response to the coronavirus pandemic jeopardizes economic reforms.

 (Source: Latin Finance)

Mexico annual inflation tumbles to lowest level since 2015 Published: 07 May 2020

  • Mexican consumer prices grew 2.15% in the year through April, down from 3.25% a month earlier, the national statistics agency said on Thursday, falling to their lowest rate since 2015 and giving the central bank more space to ease economic pressures.
  • The inflation rate was lowered by a decline in the prices of energy and agricultural products, as well as a decrease in government subsidies.
  • Mexico’s economy has been hammered by the coronavirus outbreak and sharp falls in global oil prices, with some analysts expecting gross national product to contract by as much as 10% this year. The peso currency has lost about 29% against the dollar in the last three months.
  • The decline in prices has pushed inflation well below the central bank’s 3% target rate and to its lowest level since December 2015, when prices increased 2.13%.

 (Source: Reuters)