• Peru declared a health emergency across most of the country on Monday, February 26, as a heat wave and heavy rains have led to a spike in dengue fever cases.
• The South American nation's death toll due to the virus has risen to 32 so far this year, Health Minister Cesar Vasquez. Notably, total cases also climbed to 31,300 in the first eight weeks of the year, Vasquez said, up from 24,981 in the first seven weeks.
• The Peruvian government's cabinet approved the motion to declare a health emergency on Monday, Vasquez told journalists, hours after he said a dengue outbreak was "imminent”.
• "There are 20 regions (out of 25) that will be declared in a health emergency due to dengue," Vasquez said in an earlier interview on local radio station RPP. The declaration boosts resources to health responders in the affected areas.
• Most of the cases seen so far in Peru have been in the country's north, where hospitals are already overwhelmed. Last year, 428 people in Peru died from dengue, with 269,216 infected, according to official data.

 (Source: Reuters)

• U.S. consumer confidence retreated in February after three straight monthly increases as households worried about the labour market and the domestic political environment.
• The Conference Board said on Tuesday that its consumer confidence index slipped to 106.7 this month from a downwardly revised 110.9 in January. Economists polled by Reuters had forecast the index little changed at 115.0 from the previously reported 114.8.
• "February's write-in responses revealed that while overall inflation remained the main preoccupation of consumers, they are now a bit less concerned about food and gas prices, which have eased in recent months, said Dana Peterson, chief economist at The Conference Board in Washington. “They are more concerned about the labor market situation and the U.S. political environment.
• Despite declining confidence, inflation expectations for the next 12 months fell to a nearly four-year low. Consumers' inflation expectations fell to 5.2%, the lowest level since March 2020, from 5.3% in January.

(Source: Reuters)

• January marked the steepest decline in U.S. durable goods orders in nearly four years. Business equipment investment showed signs of easing, indicating a loss of economic momentum at the year's outset.
• Durable goods orders plummeted by 6.1% in January, with a significant decline in commercial aircraft bookings. Civilian aircraft orders plummeted 58.9% last month after rising 1.0% in December. Boeing reported on its website that it had received only three orders for commercial aircraft in January, sharply down from 371 in December. Overall transportation orders fell by 16.2% last month after slipping 0.6% in December.
• Nondefense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, edged up 0.1% in January after a revised 0.6% decline in the prior month.
• These so-called core capital goods orders were previously reported to have gained 0.2% in December, indicating a much weaker start for business equipment spending than anticipated. Nevertheless, business spending on equipment rebounded modestly in the fourth quarter after contracting in the July-September period. 
• Importantly, though there are signs that manufacturing, which accounts for 10.3% of the U.S. economy, is stabilising after production eased in 2023 amid 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022, a full recovery is still a long way away. 

(Source: Reuters)

• Wigton Windfarm Limited has advised that entered into an Addendum to the Power Interchange Agreement in respect of Wigton Phase I with the Jamaica Public Service Company Limited on February 16, 2024, to extend the period of operation of the plant for another three (3) years starting April 1, 2024.
• The extension of the period of operation of Wigton Phase I will allow for the continued generation of energy from the plant by means of the existing equipment. It will also allow more time for stakeholder engagements on the repowering exercise to install newer and more efficient equipment to continue.
• After rising 25.4% in 2023, Wigton’s stock price has appreciated a further 40.5% since the start of 2024 and closed Monday’s trading session at $1.11 per share. At this price, the stock trades at a P/E of 38.3x, which is above the Main Market Energy, Industrials and Materials Sector of 16.9x.

(Sources: JSE & NCBCM Research)

• The Bank of Jamaica (BOJ), in a statement released on February 23, noted that upon review, it recognised that it had overestimated the impact of the reduction in JUTC fares on inflation and that it took full responsibility and apologised for the error.
• In early November 2023, the BOJ shared its concern about projected inflation with the Minister of Finance and the Public Service, Hon. Nigel Clarke, highlighting that inflation was projected to rise above the target range over an extended period, driven largely by the public passenger vehicle (PPV) fare increases announced by the Government on October 10, 2023, which would take effect in October 2023 (19%) and April 2024 (16%).
• It also shared with the Minister at that time an estimate of the cumulative impact of the increases in PPV fares as contributing approximately two percentage points to annual inflation and advised the Minister of its estimate of required reductions in JUTC fares to cushion the impact of the announced PPV fare increases.
• Subsequently, on 21 November 2023, the Minister announced in Parliament the temporary two-phase reduction in JUTC fares to support BOJ’s inflation targeting mandate. However, Governor Byles noted that the BOJ had overestimated the effect of the fare reduction, which had an offsetting impact of only 0.2%.
• Jamaica’s higher-than-targeted headline inflation of 7.4% in January 2024, which exceeded the Bank’s target of 4.0% to 6.0%, contributed to the Monetary Policy Committee’s (MPC) decision to maintain the policy interest rate at 7.0%.

• As a result of the above-noted price shocks, inflation is now projected to track above the Bank’s target range between the March 2024 and June 2025 quarters.

(Source: BOJ)

• The Ministry of Economy, Planning, and Development (MEPyD) reported that monetary poverty decreased by 4.7% in 2023. In the Dominican Republic, the official measure of poverty has been monetary poverty, which considers only household income. In this sense, households defined as poor under this methodology are those that are below the poverty line in the country (RD 7,645.3 – 2023 poverty line per person).
• According to the 2023 Bulletin of Official Monetary Poverty Statistics in the Dominican Republic, in 2023, national monetary poverty significantly decreased from 27.7% in 2022 to 23.0% in 2023, indicating positive progress in improving the general economic conditions of the population compared to 2022.
• The publication stated that the decrease in general poverty in the country was mainly female and rural. Poverty in rural areas decreased from 30.9% to 24.6%; meanwhile, poverty in urban areas decreased from 27.0% in 2022 to 22.7% in 2023. The percentage of women in monetary poverty decreased 5.3 percentage points to 24.1% in 2023, whereas the reduction for men was 4.0 percentage points, from 25.8% in 2022 to 21.8% in 2023. Extreme poverty also improved 0.6 percentage points from 3.8% in 2022 to 3.2% in 2023.
• The main determinants for the decline in poverty were said to be the control of inflation, along with the increase in employment and labour income favoured by a notable generation of more formal jobs.
• Notably, in 2023, the nominal per capita household income reached RD15,906 pesos (approximately US$270.65), representing an increase of 16.2% when compared to 2022. Likewise, the real per capita household income increased by 11.7% compared to 2022.
• This improvement in household income translates to a higher standard of living for locals, supported by the likelihood for greater consumption and the ability for locals to effectively meet basic needs.

(Source: The Dominican Republic’s Ministry of Economy, Planning, and Development)

• Panamanians will go to the polls on May 5, 2024, bringing to an end President Laurentino Cortizo’s (who is constitutionally barred from running) five-year stint in office.
• Cortizo's tenure has been a turbulent period for Panama. Nationwide protests broke out in both 2022 and 2023, nominally driven by the public’s frustration with cost-of-living pressures (2022) and concerns over the environmental impact of the Cobre Panamá mine (2023).
• However, the root cause of both bouts of social unrest was due to the lack of opportunities available to the bulk of Panamanians, who lack the skills to find work in the thriving professional services sector.
• That said, while the presidential contest itself is hard to call, the outlook for policy looks less uncertain. The race itself is wide open, but the implications for policy continuity are unlikely to be very significant, with the majority of candidates committed to a pro-business agenda.
• While the outlook appears positive for business in the near term, Fitch is sceptical that the electorate will be happy to persist with the status quo. Until the employment issue is resolved, it is expected that social tensions will remain elevated and that large, nationwide protests will become a more frequent phenomenon in the coming years.

(Source: Fitch Solutions)

• Despite ambitious environmental goals, Europe struggles to match the economic growth of the United States over the past two decades. The EU faces issues like chronic under-investment, an aging population, and obstacles in the free flow of labor, capital, and goods.
• Former ECB chief Mario Draghi proposes solutions involving a low cost of capital, rule adjustments favoring innovation, and necessary state aid to overcome hurdles. The emphasis is on rapid investment to restructure supply chains and decarbonize economies.
• The EU estimates indicate a requirement of 650Bn euros annually until 2030 and 800Bn euros annually thereafter until 2040 for private investments. The goal is to close the technology gap with the U.S., foster green energy sectors, and reduce reliance on imported chips.
• The EU faces challenges in implementing a capital market union due to resistance from member countries protecting their interests. Even if achieved, it won't be a cure-all for the EU's competitiveness issues, as reflected in rankings and concerns about high electricity costs. Policymakers stress the need for private investment, raising questions about the sustainability of businesses dependent on subsidies.

(Source: Reuters)

• The volume of goods moving through Spain's top ports rose by as much as 25.0% in January as attacks on shipping in the Red Sea caused companies to divert Europe-bound vessels around southern Africa instead.
• Spain's northern ports have also seen volumes in transit jump by up to triple as traders opt to avoid moving goods by truck through Europe because of widespread blockades by farmers, Spanish retail and food industry association Aecoc says.
• Ports such as Las Palmas in the Canary Islands and Barcelona saw a 25.4% and 7.6% increase in the volume of merchandise, respectively, during the first month of 2023. Overall traffic of goods to Spanish ports - including merchandise, bulk liquids, and dry bulk - increased by 3.4% in January compared to a 3.3% decline in traffic last year, according to official figures.
• Spanish ports are important entry points to Europe for shipping companies that opt to sail around southern Africa rather than through the Red Sea to avoid attacks by Houthi rebels of Yemen. The increase in traffic may be linked to the effects of the Red Sea crisis, the state-run ports agency told Reuters, but it would have to wait some months for a more accurate assessment.
• Volumes of merchandise in transit increased by 2.8% in Spanish ports, but the rise is even more evident in northern Spanish ports such as Santander and Bilbao, which in the first 30 days of the year, handled between two and three times the volume of goods in transit compared to January 2022. The rise in volumes in Santander is also due to an expansion of the port's container terminal, its press office said.

(Source: Reuters)

• Despite a record breaking H1 2023-24 revenue performance, Fontana reported a 2.2% decline in net profit relative to H1 2022-23.
• Revenue grew 9.4% (or $353.84Mn) to $4.13Bn due to stronger sales boosted by the successful launch of its Portmore store just before the busy Christmas season. Growth in key metrics such as transaction counts and average spend per customer also contributed to the higher revenue.
• In line with revenue growth, cost of sales increased by 9.5% (or $222.91Mn) YoY, which translated to a marginal 0.06 percentage points decrease in gross margin. However, Fontana is expected to see eventual improvements in gross margin as it continues to capitalise on economies of scale in its procurement and the efficiencies from its new point of sale system to reduce costs.
• That being said, the overall effect of revenue growth was tempered by a 16.7% (or $159.79Mn) increase in operating expenses to $1.11Bn, driven primarily by administrative expenses, which grew by 20.9% (or $186.35Mn) to $1.08Bn. Expenses related to the opening of its new Portmore location, higher staff costs, increases in security costs, and insurance rates all contributed to the higher admin expenses. However, the impact of these increases on operating expenses was tempered by a 40.4% reduction in selling and promotion expenses.
• Of note, as of January 2024, Fontana has entered into its 6th year of trading on the Jamaica Stock Exchange, which means that it will now be required to pay 50% of the income tax levied on corporations as per JSE rules for junior market companies. This is expected to translate into higher tax expenses going forward.
• Fontana’s stock price has decreased by 1.10% since the start of the calendar year. The stock closed Wednesday’s trading session at $9.90 and at that price trades at a P/E of 19.4x, which is above the Junior Market Distribution Sector Average of 16.6x.

(Sources: Company Financials & NCBCM Research)