WEEKLY MARKET ROUND-UP

Transcription

1 1 WEEKLY MARKET ROUND-UP August 7 th, 2017 Local Economic and Equity Review Equity Review Market activity improved last week with the weekly traded volume climbing 73% to 1.9M, thanks to the heightened trading in Scotia Investments Jamaica Limited (SIJL), JMMB Group Limited (JMMBGL) Trinidad and Tobago NGL Limited (TTNGL). At the end of the week, SIJL was the volume leader with 508, units (27.33%) followed by JMMBGL with 496,371 units (26.66%) and TTNGL with 435,584 units (23.39%). Local indices weekly performance: The Composite Index advanced by 0.05 points (0.00%) to close at 1, (YTD: 0.03%). The All T&T Index declined by 0.05 points (0.00%) to close at 1, (YTD: 2.32%). The Cross Listed Index advanced by 0.02 points (0.02%) to close at (YTD: 7.67%). 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% Weekly Trend Company Releases First Citizens Bank Limited (FIRST): For the nine months ended June 2017 For the nine (9) months ended June 30th, 2017, First s earnings per share (EPS) grew marginally to $1.97(0.5%), when compared to the $1.96 generated in the corresponding 2016 period. US$: TT$ Oil (Per Barrel) $49.58 Natural Gas (MMBTU) $2.774 During the period under review, net interest income climbed 11.2% to $1.1 billion while other income weakened 14%, settling at $461.7 million. This brought the nine (9) month total net income to $1.5 billion, which represents a 2.1% increase when compared to corresponding period for Operating profit improved 7% during the period, carrying the operating profit margin up to 44% (9M 2016: 41%). Share of profits in associates and joint venture amounted to $16.5 million as at June 2017, a notable 58% increase in the line item. The Group's profit after tax stood at $498.5 million during the period, 1.1% higher than the 2016 corresponding period. Total assets amounted to $38.7 billion as at June 30th, 2017.

2 2 At a current price of $31.65, FIRST trades at a trailing P/E multiple of times, which is in line with the local market P/E of 12.6 times, but lower than the average banking sector P/E of times. The stock currently provides a 4.30% dividend yield to its investors. FIRST faces challenges from 2 of its major operating countries, Trinidad and Tobago and Barbados, both of which have a high debt to GDP ratio and have been downgraded by international rating agencies within the last eight (8) months. However, considering banking stocks resiliency during economic challenges, FIRST s stability and its attractive dividend yield, we believe that FIRST is an attractive investment for the conservative investor. Local Fixed Income Review In the local bond market we see a steady increase in both the demand for, and issuance of corporate bonds, with JMMBITT (as an issuer) being no exception! As suggested previously, CBTT has opted not to roll some of its Treasury Bill maturities, perhaps in light of the expected bond issues for some quasi-gortt entities remains bare in terms of GORTT bond availability, but in the corporate space we expect new issues from quasi-state entities to dominate proceedings until Excess liquidity has subsequently risen to approximately TTD ~3.2 billion, which should facilitate our estimated aggregate market demand for investable assets. T&T sovereign and corporate Eurobond prices continue to rise, and with recent news of the positive economic growth expected for 2017, there may be another spike in demand to come. As an example, buyers of PETRTT in late June would enjoy capital gains in excess of 5% based on today s prices. Regional Economic and Fixed Income Review GUYANA: Economy sees marginal growth for first half of 2017 In the first half of 2017, Guyanese GDP grew by 2.2 percent, when compared to 2.0 percent for the same period last year. This according to the 2017 Mid-Year Report released by the Ministry of Finance. The report noted several factors contributing to the economy s marginal growth, which included the expansion of the agriculture, fishing, and forestry sector and contributions from the Portfolio Management Basics 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 manufacturing, construction, and services sectors. Expansion of the agriculture sector has led to entries into new markets, such as exports to Mexico of over $1 billion. The development of the economy s oil sector, which is expected to truly bear fruit in 2020, is anticipated to further propel the economy s growth. EM New Issues: Issuer Tenor Issue Yield Issue Size Credit Rating Panama Metro Line 5Yr 2.33% 618.7mm (P)BBB TV Azteca (Mexico) 7Yr 8.25% 400mm B+ Banco General SA (Panama) 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 3.48% A+ Gov't of Jamaica 5.06% 6.45% B Gov't of the Dominican Rep. 5.00% 6.16% BB- Gov't of Trinidad & Tobago 5.07% BBB+ Sources: Bloomberg, CMC, JMMB Group Risk & Research International Economic Review and Outlook US ECONOMY: Strong labour market 10Yr 4.24% 550mm BBB Optimism for another Fed interest rate hike increased on Friday, on the back drop of a strong growth in non-farm payrolls to 209,000 in July and a 16-year low unemployment rate. Both metrics were better than widely projected. Within the manufacturing and services sector, the leading indicator, employment growth, remained fairly stable indicating possible future gains Average wages remained subdued, rising 0.3% in July, still only 2.5% higher than a year earlier. 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. The positive employment report suggests the real economy is moving in line with the Fed s targets. As such, we believe that the Fed will press ahead with further rate hikes and balance sheet normalization later this year.

4 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) U.S. inflation data July s inflation figures are expected to be published on Friday. Market analysts expect consumer prices to ease up 0.2%, while core inflation is forecast to rise 0.2%. On a calendar- year basis, core CPI is projected to climb 1.7%. The Fed usually targets 2% core inflation or less. Rising inflation would therefore be a catalyst to raise interest rates in the months ahead 2) China trade figures China is expected to release its July trade figures on Tuesday. Exports are forecast to have climbed 10.9% in July from a year earlier, following a jump of 11.3% a month ago, while imports are expected to have risen 16.6%, after increasing 17.2% in June. China's economy grew at a faster-than-expected rate of 6.9% in the second quarter, matching the first quarter's pace, supported by solid exports, industrial production and consumption. 3) OPEC/IEA monthly report 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 Organization of Petroleum Exporting Counties (OPEC) will publish its monthly assessment of oil markets on Thursday. This should include global crude stockpiles figures for July. On Friday, the International Energy Agency will release its own monthly report on global oil supply and demand, which will give traders a better picture of the oil market. Additionally, OPEC and non-opec countries are set for Monday and Tuesday in Abu Dhabi to discuss compliance to the agreement on global production limits that run through March 2018.

5 5 c A MEMBER OF THE JMMB GROUP Legend: positive price movement no price movement negative price movement MARKET OVERVIEW TTCOMP P/E multiple 12.61x TTCOMP Div. Yield 4.20% 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 Aug 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% % Oct Sept Jun, Nov GRACEKENNEDY GKC Dec % 6.7% -19.7% -54.0% % Sept Sept May, Sept, Dec MASSY HOLDINGS LTD MASSY Sep % -5.8% 4.2% 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 % 0.1% 67.0% 193.7% % Sep Aug Apr, Sep GUARDIAN MEDIA LTD GML Dec % -3.4% -3.2% -3.5% % Jun May Jun, Nov NATIONAL FLOUR MILLS NFM Dec % -15.5% 255.0% 139.3% % Jul Jun Aug ONE CARIBBEAN MEDIA OCM Dec % -24.9% -5.6% -16.0% % Sept Sept 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 % 12.0% N/A N/A % Sep Aug 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 % 28.9% -11.9% -32.1% % Sept Aug Apr, Sept JMMB GROUP LTD JMMBGL Mar % 31.1% 131.4% 31.1% % 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 % -2.7% 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