• Real GDP in Costa Rica will significantly contract through the end of 2020 amid the COVID-19 pandemic before a sluggish recovery begins in 2021, supported by rebounding domestic commercial activity and tourism inflows.
• The likelihood of fiscal austerity in the coming years will limit public expenditures, push unemployment higher, and restrict private consumption, capping the country’s longer-term upside.
• Fitch Solutions revised its 2020 and 2021 real GDP growth forecasts to -5.3% and 3.0% y-o-y, from -4.1% and 3.1% previously, as the COVID-19 pandemic will have a more severe impact on short-term growth than previously expected.

(Source: Fitch Solutions)

• The dollar edged up on Tuesday and the yen stayed low, as investors remained optimistic about progress towards a COVID-19 vaccine, although the moves were more tempered than in the previous session.
• U.S drugmaker Pfizer Inc and German partner BioNTech SE said on Monday a large-scale clinical trial showed their vaccine was more than 90% effective in preventing COVID-19 - news that lifted global markets with a wave of risk appetite, which subsided somewhat overnight before re-igniting on Tuesday.
• The dollar rose after the announcement. Although the dollar is a safe-haven, and so typically falls on positive news, analysts said the move was caused by investors quitting long positions in other major safe-haven currencies such as the Japanese yen and the Swiss franc.

(Source: Reuters)

• France’s unemployment rate rose to its highest level in two years in the third quarter, the INSEE (National Institute of Statistics and Economic Studies) statistics office said on Tuesday, as the euro zone’s second-biggest economy grapples with the fallout from the COVID-19 crisis.
• INSEE said the jobless rate jumped to 9.0% from 7.1% in the second quarter, its highest level since the third quarter of 2018.
• INSEE said that marked the single biggest quarterly increase on record going back to 1975, but it was largely because the rate had been skewed in the previous two quarters because people were not able to look for work due to a mid-March to mid-May coronavirus lockdown.

(Source: Reuters)

• Mayberry Investments Limited (MIL) reported a net loss attributable to shareholders of $663.77Mn (EPS: -$0.55) for the nine months ended September 30, 2020, down 254.6% (or $1.09Bn) from the corresponding period in 2019.
• The performance over the period was driven by an 88.9% (or $1.73Bn) reduction in net interest income and other revenues, primarily due to a reduction in fees and commission income by 40.7% (or $206.76Mn), lower net foreign exchange income (down 45.1% or $144.49Mn), and a decline in the value its investment portfolio by 244.4% (or $1.78Bn).
• The negative performance was tempered by a decrease in operating expenses by 15.0% (or $199.73Mn), on account of a reduction in depreciation and amortization expenses by 30.7% (or $259.15Mn).
• Management noted that the global and local financial markets continue to experience the negative impact of the COVID-19, and as the financial environment continues to evolve, the organization will continue to assess the financial landscape.
• The company’s stock price has declined by 38.2% since the start of the year, closing Wednesday’s trading session at $5.56. At this price, the stock currently trades at a P/B of 0.7x, which is below the Main Market Financial Sector Average of 1.7x.

(Source: MIL Financials)

• Honduras’ current account surplus will narrow in the quarters ahead as rebounding economic activity pushes up goods import demand.
• Global economic recovery in 2021 will support Honduran exports and remittance inflows, which will limit the narrowing of Honduras’ current account surplus.
• Fitch Solutions revised its 2020 current account forecast to 4.5% of GDP, up from 2.3% previously, and its 2021 forecast to 2.5%, from 0.7%, as the continued spread of Covid-19 has caused longer-than-expected weakness in import demand.

(Source: Fitch Solutions)

• Candidates for the incumbent, pro-statehood Partido Nuevo Progresista appear to have won Puerto Rico’s gubernatorial and congressional elections on November 3.
• However, local legislative elections saw the PNP lose its majorities to the pro-commonwealth Partido Popular Democrático, while third parties also made gains.
• The PNP’s territory-wide victories and the substantial authority held by the unelected Financial Oversight and Management Board suggest that policy continuity will remain high over the coming years.
• In addition, a referendum on statehood appears to have passed, though Fitch Solutions believe the US Congress remains unlikely to admit Puerto Rico as the 51st state.

(Source: Fitch Solutions)

• The U.S. trade deficit fell in September after hitting a 14-year high the previous month as exports outpaced imports.
• The gap between what the U.S. sells and what it buys abroad fell to $63.9 billion in September, a decline of 4.7%, from a $67 billion deficit in August, the Commerce Department reported Wednesday.
• September exports rose 2.6% to $176.4 billion, pushed higher by the food and beverage category, where shipments worth $12.9 billion were the highest since July of 2012. Soybean exports rose 63% in September. Imports ticked up 0.5% to $240.2 billion, also helped by $13.5 billion in the food and beverage category, which were the highest on record.
• Year to date, the goods, and services deficit has jumped $38.5 billion, or 8.6%, to $485.6 billion. The total deficit for goods and services for the same period in 2019 was $447.1 billion. Total exports are down 17.4% this year from 2019, while imports have declined by 12.4% as the coronavirus pandemic has sabotaged global commerce this year and disrupted global supply chains everywhere.

(Source: CNBC)

• The Fed’s two-day meeting is expected to end Thursday with no new proclamations from the central bank, and Chairman Jerome Powell will be sure to distance himself from the election uncertainty.
• But he is likely to be asked about one of the most pressing concerns in markets — a fiscal stimulus to help the economy recover from the effects of the coronavirus. That topic has been a political hot spot, and it could be resolved in several ways depending on how the election turns out.
• “With a GOP Senate majority, the expectations for stimulus is absolutely getting dialed back, which is a good part of why yields are plummeting the way they are,” said Julian Emanuel, equity and derivatives strategist at BTIG. The 10-year Treasury yield went from a high 0.94% Tuesday night to about 0.75% Wednesday.

(Source: CNBC)

• For the year ended September 30, 2020 QWI Investments Limited reported an unaudited net loss of $452.97Mn (EPS: -$0.33), down 382.2% (or $701.57Mn) relative to the net profit of $248.60Mn (EPS: $0.55) reported in 2019.
• This performance was primarily due to losses from investments totaling $490.81Mn relative to the gain of $389.50Mn made in 2019. This was due primarily to losses on the Jamaican portfolio of $524Mn and $43Mn in gains on the overseas portfolios. QWI also had an unrealized currency loss of $3.30Mn for the period.
• The Company’s portfolio is currently largely weighted towards the local stock market which has fallen off significantly year to date. Looking forward, the directors believe the JSE will provide attractive investment returns as the Jamaican economy strengthens.
• QWI’s stock price has decreased by 29.5% since the start of the year, closing Tuesday’s trading session at $0.74. At this price, the stock currently trades at a P/B of 0.5x, which is below the Main Market Financial Sector Average of 1.7x.

(Source: QWI Financials)

• El Salvador is expected to run a large fiscal deficit in the quarters ahead as elevated government spending supports economic activity while a subdued economic recovery undermines revenue growth.
• Fitch Solutions revised its 2020 budget forecast to -11.3% of GDP, from -9.6% previously, and the 2021 forecast to -9.4%, from -6.2%, as the contraction in economic activity has led to a larger than expected fall in revenues.
• Large deficits in 2020 and 2021 will push up public debt significantly, and it is anticipated that public debt will peak at 94.4% of GDP in 2022, up from 73.3% in end-2019.

(Source: Fitch Solutions)