WEEKLY MARKET ROUND-UP

Transcription

1 1 WEEKLY MARKET ROUND-UP July 31 st, 2017 Local Economic and Equity Review Equity Review Market activity slowed last week, with the weekly volume traded settling at 1.1M, 42% lower than the 1.9M recorded the previous week. At the end of the week, JMMB GROUP LIMITED (JMMBGL) was the volume leader with 443, units (41.35%) followed by THE WEST INDIAN TOBACCO COMPANY LIMITED (WCO) with 217,615 units (20.28%) and CLICO INVESTMENT FUND (CIF) with 211,291 units (19.69%). Local indices weekly performance: The Composite Index advanced by 2.92 points (0.24%) to close at 1, (YTD: 0.03%). The All T&T Index advanced by 2.00 points (0.11%) to close at 1, (YTD: 2.32%). The Cross Listed Index advanced by 0.53 points (0.63%) to close at (YTD: 7.65%). Last week, the market showed mixed movements in equity prices, with approximately 8 trading stocks declining and 3 advancing. We continue to see heightened demand for cross listed stocks, namely SIJL and GKC, as investors seek to satisfy USD needs. Index/ Item Level/ Price All TTSE 1, S&P 500 SPX Volatility Index 2, T&T Repo Rate 4.75% T&T Gross Debt/ GDP 61.1% US$: TT$ Oil (Per Barrel) $49.71 Weekly Trend Equity Updates Scotia Investments Jamaica Limited (SIJL) has been granted approval from the Supreme Court, to convene a meeting with its stockholders, pursuant to which Natural Gas (MMBTU) $2.941 the Company would become a wholly-owned subsidiary of Scotia Group. According to the notice, once approved, SIJL s stock units held by investors, other than Scotia Group, would be cancelled and Scotia Group would pay to each such stockholder the sum of J$38.00 per cancelled stock unit. Stockholders in Trinidad and Tobago will be paid in United States currency only and those in Jamaica will have the option to elect to receive payment in United States currency.

2 Local Fixed Income Review 2 Portfolio Management Basics Nothing to shout about in the local bond market over the past week as expected. Excess liquidity has been steadily declining (last at TTD ~1.7bn), but with a number of corporate bond issues on the horizon perhaps Treasury Bill maturities for the month of August will be selectively rolled. We are still aware of large institutional cash balances looking for a cozy long term home. In terms of USD-denominated bonds, we ve seen demand rise across nearly all T&T related credits. The only exception to this increase may be Consolidated Energy (CONSEN), but these bonds typically trade in line with high-yield US corporates, while the remaining names on the T&T corporate curve trade based on quasi-sovereign risk. Regional Economic and Fixed Income Review DOMINICAN REPUBLIC: Moody's upgrades sovereign International rating agency, Moody s, upgraded its credit rating on the sovereign, Dominica Republic, to Ba3 from B1 and changed the outlook from positive to stable. This decision was based on the following key drivers: (1) Robust growth outlook (2) Reduction in external risks as international reserves has increased. (3) The reduction in fiscal deficits over the last four years The report also highlights the robust and competitiveness of the Dominican Republic's tourism industry, which currently contributes approximately 17.3% of GDP and 15.9% of total employment. This is likely to continue to support medium term growth prospects. Future prospects remain strong due to investment in infrastructure during the last 5 years, coupled with cost competitiveness aided by a flexible exchange rate. Investment Policy Statement (IPS) A document that captures information about a respective portfolio s strategic asset allocation, objectives, risk tolerance, time horizon, and details including frequency of portfolio reviews. Strategic Asset Allocation A "base policy mix" that is established based on expected returns, client s objectives, risk tolerance, and time horizon. Because the value of assets can change given market conditions, the portfolio constantly needs to be re-adjusted to meet the policy Tactical Asset Allocation A variation from a portfolio s strategic asset allocation weights in order to take advantage of short term market opportunities. Portfolio Rebalancing The process that involves constantly adjusting the portfolio to meet its strategic asset allocation.

3 EM New Issues: Issuer Tenor Issue Yield Issue Size Credit Rating Banco de Bogota 10Yr 4.562% 600mm BBB- (Colombia) Corporacion Nacional del 10Yr 3.84% 1.5bn A+ Cobre de Chile Corporacion Nacional del Cobre de Chile 30Yr 4.674% 1.25bn A+ Regional Sovereign Benchmark Yields (Bloomberg): Issuer ~10 Yr Yield ~30 Yr Yield 3 Credit Rating Commonwealth of the Bahamas 4.97% BB+ Gov't of Barbados 8.06% 9.24% CCC+ Gov't of Bermuda 3.51% A+ Gov't of Jamaica 4.81% 6.37% B Gov't of the Dominican Rep. 5.05% 6.21% BB- Gov't of Trinidad & Tobago 4.64% BBB+ Sources: Bloomberg, CMC, JMMB Group Risk & Research International Economic Review and Outlook US ECONOMY: Fed Rates; Balance sheet normalization As widely expected, the US Federal Reserve left its interest rate policy unchanged this week, hinting that the economy s huge balance sheet standing will be reduced as early as September Developments in the country s inflation and unemployment rates will be followed closely for hints on the timing of the next rate hike. Survey evidence suggests that if the unemployment rate falls below 4% in the coming months, the Fed won t wait for signs that inflation is picking up before tightening monetary policy further. Policymakers are steadfast on a possible December rate hike. Amortizing Bond A bond that makes payments of both interest and principal at specific intervals until final maturity. Bullet Payment or Plain Vanilla Bond A bond that pays interest at periodic intervals and repays principal in a single payment at maturity. Exchange Traded Funds (ETFs) A special type of fund that allows efficient diversification by investing in a portfolio of stocks or bonds and which is designed to mimic the performance of a specific index. Margin The use of leverage or borrowed funds utilizing securities held in a portfolio as collateral. The intent is to increase the overall returns of the portfolio. However, this can be a very risky undertaking especially in times of extreme volatility. OIL UPDATES: Petroleum Status Report The Energy Information Administration (EIA s) weekly US Petroleum Report, released estimates that the amount of crude oil in commercial storage tanks dropped by about 7.2m barrels, to 483.4m last week versus analysts expectations of a 2.6m barrel fall. This marks

4 the fourth (4 th ) consecutive weekly drop in commercial crude stocks in the US and possibly evidence that OPEC s output cuts are starting to have an impact on inventory levels. The main driver of last week s draw in stocks was a fall in net imports. We believe that this trend may continue over the next few months which is expected to support prices later in the year. Oil prices closed on Friday at US$49.71 per barrel. The Week Ahead Below is a list of the three (3) biggest events on the economic calendar that are most likely to affect the markets for the upcoming week. 1) Bank of England policy announcement On Thursday, the Bank of England is expected to announce its rate decision and publish its Quarterly Inflation Report. We expect that the bank will keep rates at their record low given the subdued state of the economy. Besides the BOE, activity reports on the manufacturing, construction and services sectors are expected to be released this week. These reports would provide an indication on the continued effect that the Brexit decision is having on the economy. 2) Euro zone flash inflation figures 4 GORTT The Government of the Republic of Trinidad and Tobago. TRITOB Trinidad and Tobago USD bond. JAMAN Government of Jamaica Bond DOMREP Dominican Republic Bond BARBAD Government of Barbados Bond UST U.S. Treasuries The euro zone will publish flash inflation figures for July on Monday. The consensus forecast is that the report will show consumer prices rose 1.3% this month, unchanged from June and well short of the ECB's target of just below 2%.In addition to the inflation data, the euro zone will publish a preliminary report on second-quarter economic growth on Tuesday. The region's economy is forecast to expand 0.6% in the April-June period, equivalent to an annualized 2.4%. 3) Chinese manufacturing data China s July manufacturing sector activity will be released Monday, with expectations for a modest dip to 51.6 from June's three-month high of Recall that any sector activity above 50.0 signals expansion, while readings below 50.0 indicate sector contraction. China's economy growth picked up in Q2, faster than expected to 6.9%, in line with the first quarter's pace. This growth has been supported by healthier exports, industrial production and consumption.

5 5 c A MEMBER OF THE JMMB GROUP Legend: positive price movement no price movement negative price movement MARKET OVERVIEW Friday, 28 July 2017 TTCOMP P/E multiple 12.61x TTCOMP Div. Yield 4.22% Ticker Year End Price Price 5 year 10 year Trailing Trailing Trailing Div Payment Ex. Div Expected Div. Market to WTD change YTD change Book Value July July change change Trailing P/E EPS DIV DIV Yield Date Date Payment Dates Book Ratio Banking FIRST CARIBBEAN INT'L BANK FCI Oct % -9.8% 2.3% -41.1% % Jul Jun Jan,Jul FIRST CITIZENS BANK FIRST Sep % -9.52% N/A N/A % May May May, Dec NCB FINANCIAL GROUP LTD NCBFG Sep % 36.0% 183.3% 104.0% % Aug Aug Feb, May, Apr, Nov REPUBLIC FINANCIAL BANK RFHL Sep % -6.0% -3.4% 29.0% % Jun May May, Dec SCOTIABANK T'DAD & T'BGO SBTT Oct % -1.4% -11.4% 95.4% % Jul Jun Jan, Apr, Jul, Oct Sector Avg % Conglomerates ANSA McAL AMCL Dec % -0.8% -0.9% 37.5% % Nov Oct Jun, Nov GRACEKENNEDY GKC Dec % 5.2% -20.8% -54.7% % Sept Sept May, Sept, Dec MASSY HOLDINGS LTD MASSY Sep % -5.8% 4.3% 2.1% % Jun May Jan, Jun Sector Avg % Property PLIPDECO PLD Dec % 4.6% 4.6% -51.6% % May May May Sector Avg % Manufacturing I ANGOSTURA HLDS LTD AHL Dec % 0.7% 68.0% 195.5% % Sep Aug Apr, Sep GUARDIAN MEDIA LTD GML Dec % -3.4% -3.2% -3.4% % Jun May Jun, Nov NATIONAL FLOUR MILLS NFM Dec % -15.1% 256.7% 140.4% % Jul Jun Aug ONE CARIBBEAN MEDIA OCM Dec % -24.9% -5.6% -16.0% % April 30, 2017 April 11, 2017 Apr, Sep WEST INDIAN TOBACCO WCO Dec % -1.13% 47.6% 356.2% % May April Apr,May,Aug,Nov UNILEVER CARIBBEAN UCL Dec % % 8.5% 192.4% % June May Jun, Aug Sector Avg % Manufacturing II BERGER PAINTS BER Mar % -0.2% 14.1% N/A N/A % Jul Jun Jul READYMIX (WI) LTD. RML Dec % 0.1% -51.1% 56.9% N/A % TRINIDAD CEMENT LTD TCL Dec % -5.9% 177.9% -43.7% % Jul Jul Jun Sector Avg % Trading AGOSTINI'S LTD AGL Sep % 14.3% 22.0% 90.8% % Jun Jun Feb,Jun LJ WILLIAMS 'B' LJWB Mar % 21.2% -10.1% -33.3% % PRESTIGE HOLDINGS PHL Nov % -2.8% 14.7% 85.9% % May May May,Oct Sector Avg % Energy TRINIDAD AND TOBAGO NGL LTD NGL Dec % 12.1% N/A N/A % April Mar May, Sept Sector Avg % Non- Banking Finance ANSA MERCHANT BANK AMBL Dec % -0.2% 7.4% 72.0% % Oct Sep May, Oct GUARDIAN HOLDINGS LTD GHL Dec % 28.1% -12.4% -32.5% % April Mar Apr, Sept JMMB GROUP LTD JMMBGL Mar % 33.3% 135.3% 33.3% % June June Jun, Dec NATIONAL ENTERPRISES LTD NEL Mar % -1.6% -29.1% 46.6% % Aug Jul Aug, Dec SAGICOR FIN. CORP. SFC Dec % 3.6% 13.8% -49.3% % May April May, Nov SCOTIA INVESTMENTS J'CA LTD SIJL Oct % 9.5% -4.3% N/A % April Mar Jan, Apr, Jul, Oct Sector Avg % Mutual Fund Market CLICO INVESTMENT FUND CIF Dec % -1.0% N/A N/A N/A N/A % Aug Jul Feb, Aug CALYPSO MACRO INDEX FUND CALYP Dec % -2.2% N/A N/A N/A N/A % Jul June Jan, Apr, Jul, Oct