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U.S. Economy Risks ‘Tragic Scenario’ on Trump’s Stimulus Pullout Published: 07 October 2020

  • The collapse of pre-election U.S. stimulus talks threatens to inflict another wave of economic pain on Americans and curtail a recovery that’s already slowed.
  • President Donald Trump’s decision Tuesday to walk away from talks with Democrats amid differences over the size of stimulus -- even though hours later he appeared to reverse course -- likely ended the chances of a relief package before the Nov. 3 election. Aid might be delayed until January or February, after a new Congress is seated, meaning there could be a period of four or five months without additional support for jobless Americans and small businesses.
  • The decision puts the economic rebound at risk of stalling in the fourth quarter, with activity remaining well below its pre-pandemic level amid the coronavirus’s persistent spread and the wait for a vaccine. It could leave the Federal Reserve under pressure to provide more support.

(Source: Bloomberg)

ECB’s Lagarde Pledges No Premature Removal of Monetary Support Published: 07 October 2020

  • European Central Bank President Christine Lagarde pledged not to remove monetary support until the coronavirus crisis is over, reinforcing her message that central banks and fiscal authorities must work together.
  • “Macroeconomic policies in the euro area have acted forcefully, geared toward protecting productive capacity and jobs,” she said in an interview with the Harvard International Review published Wednesday. “We should guard against the premature withdrawal of these support measures.”
  • Most economists expect the central bank to increase stimulus by boosting its 1.35 trillion-euro ($1.6 trillion) bond-buying program before the end of the year. Lagarde spoke a day after she and ECB chief economist Philip Lane called on governments to keep up their support, with the president warning against creating a “cliff-edge” that undoes progress so far.

(Source: Bloomberg)

BOJ Holds Policy Rate Steady At 0.50% Published: 01 October 2020

  • Bank of Jamaica announces its decision to hold the policy interest rate (the rate offered to deposit-taking institutions on overnight placements with BOJ) unchanged at 0.50% per annum.
  • Its current assessment remains consistent with its August projection that inflation will average 4.7% over the next two years and will track within the target range of 4.0% to 6.0%. This forecast was mainly predicated on expectations for some economic recovery from the COVID-19 pandemic as well as higher energy and agricultural food prices.
  • The economic outlook for Jamaica remains highly uncertain in the context of the ongoing COVID-19 pandemic but BOJ will continue to assess incoming data and stands ready to implement other policy measures if the need arises.

(Source: BOJ)

Palace Amusement Closes Palace Cineplex and Palace Multiplex As Pandemic Depresses Performance Published: 01 October 2020

  • Despite the best efforts of management to minimize overheads by way of, inter alia negotiating with landlords, utilizing fewer screens to minimize electricity cost and staff rotation, there are various costs that are unavoidable whether or not the cinemas are operating.
  • Despite its best efforts, attendance at the cinemas continues to be severely impacted by the fluctuation in curfew hours and the spike in community spread of the Coronavirus.
  • Operations at Palace Multiplex were previously negatively impacted by the ZOSO and States of Emergency in St. James and the pandemic has far worsened the situation. Palace Cineplex has also suffered especially grave repercussions with attendance at zero on some occasions.

(Source: JSE)

LatAm Sovereign YTD International Bond Issuance Exceeds 2019 Total Published: 01 October 2020

  • Latin American sovereigns have tapped international bond markets at a faster pace and in greater amounts in 2020 than in 2019 to help meet higher funding needs, supported by highly expansionary monetary policy settings at the world's major central banks.
  • Reliable international market access limits sovereigns' liquidity risk and supports financing flexibility, although ramping up hard currency borrowing increases the sensitivity of debt ratios to exchange rates.
  • External issuance by Latin American sovereigns of US$42.5Bn year-to-date already exceeds last year's total of US$34.5Bn and is higher than the 2015-2019 annual average of about US$30Bn, excluding Argentina. 2020 volumes do not include bonds issued in distressed debt exchanges.

(Source: Fitch Solution)

Dom Rep CB Reserves Above $10Bn Mark Again – Policy Rate Decision Published: 01 October 2020

  • Dom Rep’s Central Bank (CB) reported that international reserves reached $10.5Bn as of September 28 (13.3% of GDP) following the successful sale of global bonds last week. The CB highlighted that it was the largest ever bond transaction executed by a Central American country.
  • The CB argued that the recovery in economic activity is being supported by an expansive monetary policy stance. Since late March, the CB has cut the policy rate by 150 basis points (bps) to 3% and injected liquidity for some DOP190Bn (4% of GDP) through a variety of stimulus measures.
  • The CB also provided liquidity in USD for an estimated $622Mn. DOP lending rates have decreased to 9.8% from 13.3% in March, and domestic credit to the private sector is now expanding at a 10% YoY pace.
  • The CB plans to keep its expansive monetary policy in place during the health emergency and projects that GDP growth will reach its 5% potential growth rate towards the end of 2021.

(Source: Bloomberg)

IMF Pushes For Changes Governing Debt Restructurings Published: 01 October 2020

  • International Monetary Fund officials on Thursday warned that risks of a sovereign debt crisis sparked by the coronavirus pandemic will rise without changes to the international debt architecture, including more transparency for government borrowing.
  • In a blog post and speech, IMF officials called for the G20 debt service suspension initiative to be extended for another 12 months until the end of 2021, and a common restructuring approach across all official bilateral creditors, including China. A new IMF research paper also laid out options for improving debt transparency and restructuring.
  • “A pandemic-induced systemic debt crisis cannot be ruled out,” IMF First Deputy Managing Director Geoffrey Okamoto said in remarks prepared for delivery to a Peterson Institute for International Economics online event. “The longer the problem is postponed, the worse it will become.”

(Source: Reuters)

Outflows Point To 'Risk-Off' Brewing In Emerging Markets Published: 01 October 2020

  • Large outflows from emerging market investments towards the end of September point to a big “risk-off” shift brewing, Institute of International Finance (IIF) economists say.
  • Emerging markets sucked in $2.1Bn in portfolio flows in a month marked by fresh market turmoil, uncertainty arising from the U.S. election, a rejuvenated dollar, and uncertainty about the recovery from the coronavirus.
  • But it said high-frequency outflows from emerging markets towards the end of the month were almost as big as in the 2013 “taper tantrum” or during 2015 when the Chinese yuan was devalued.
  • IIF said it saw growing differentiation inflows to emerging markets, with some markets seeing outflows that continue to build, and increasing divergence between debt and equity flows.
  • After a huge exodus from the asset class at the height of market turmoil caused by the pandemic in March, flows to emerging markets had been recovering somewhat as investor confidence in developing countries’ handling of the crisis improved.

(Source: Reuters)

First Citizens Investment Services Limited (“FCIS") Acquires 5% Stake in Barita Investments Limited Published: 29 September 2020

  • Barita Investments Limited advised that, following the closing of its Additional Public Offer, First Citizens Investments Services Limited (“FCIS"), a fully owned subsidiary of First Citizens Bank Limited (FCB), now owns 5% of the shareholding of the Company.
  • FCIS is a registered securities broker-dealer in the countries in which it operates, namely, Trinidad & Tobago, St. Lucia, Barbados, and St. Vincent and Grenadines. FCIS, with total assets under management of approximately US$3.2Bn, which includes both proprietary and client assets, offers investment management products and services to its customers.
  • FCB is a publicly-traded company on the Trinidad and Tobago Stock Exchange with just over US$6Bn in assets and equity of over US$1Bn. FCB has an Investment Grade credit rating of BBB- by Standard & Poor.

(Source: JSE)

Basis of Allocation – Tropical Battery Company Limited Combined Offer for Sale and Initial Public Offer Published: 29 September 2020

  • NCB Capital Markets Limited (NCBCM) has advised of the Basis of Allocation of Tropical Battery Company Limited’s combined Offer for Sale and Initial Public Offer (IPO), as follows:
  • Applicants in all reserved share pool will be allocated 100% of the shares for which they applied.
  • Subscribers to the General Public Pool will receive up to the first 50,000 units (Base Allotment) plus a pro-rata allocation of approximately 30.6499% of the excess shares for which they applied above the Base Allotment.
  • Refunds for Applicants who did not receive full allotment will commence on September 30, 2020.

(Source: JSE)