• 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)

• 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 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)

• 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)

• 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)

• 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)

• 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)

• Millions more Americans likely sought unemployment benefits last week, suggesting a broadening of layoffs from consumer facing industries to other segments of the economy and could remain elevated even as many parts of the country start to reopen.
• Initial claims for state unemployment benefits likely totaled a seasonally adjusted 3.0 million for the week ended May 2, according to a Reuters survey of economists. That would be down from 3.839 million in the prior week and mark the fifth straight weekly decrease in applications since hitting a record 6.867 million in the week ended March 28.
• Last week’s filings would lift the number of people who filed claims for unemployment benefits to about 33.3 million since March 21, roughly 22% of the working age population.

(Source: Reuters)

• Oil prices jumped on Thursday on news that China’s exports unexpectedly rose last month, and on the back of U.S. output cuts and the slow return of some activity in Europe.
• Brent crude rose $1.87, or 6.3%, to trade at $31.59 per barrel, after dropping 4% on Wednesday. U.S. West Texas Intermediate futures gained $2.40, or 10%, to trade at $26.39 per barrel, after declining more than 2% in the previous session.

(Source: CNBC)

• Iron Rock Insurance reported unaudited net loss of $2.81Mn (EPS:-$0.01) for the three months ended March 31, 2020. This represents a  71.1% (or $6.92Mn) reduction from the $9.73Mn net loss that was reported one year prior.
• The main drivers of this outcome was a 161.0% (or $12.49Mn) increase in other income due to improvements in investment income, gains from sale of investment and foreign exchange gains.. 
• The stock has fallen 38.73% since the start of the calendar year and closed Tuesday’s trading session at $2.16.  At this price the company’s stock currently trades at a P/B of 0.88x  which is below the Junior Market Financial Sector Average of 2.72x.

(Source: Iron Rock Financials)