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China drives global oil demand recovery out of coronavirus collapse Published: 03 June 2020

  • China’s oil demand has recovered to more than 90% of the levels seen before the coronavirus pandemic struck early this year, a surprisingly robust rebound that could be mirrored elsewhere in the third quarter as more countries emerge from lockdowns.
  • While China - the world’s second-largest oil consumer - is the outlier for now, easing travel restrictions and stimulus packages aimed at resuscitating economies could accelerate global oil demand in the second half of 2020, industry executives said.
  • Widespread lockdowns to contain the spread of the virus took an especially heavy toll on oil markets, wiping roughly 70% off global prices by mid-April and leading to huge build-ups in oil and fuel inventories worldwide.

(Source: Reuters)

Saudi, Russia reach deal on oil cuts, raising pressure for compliance Published: 03 June 2020

  • OPEC leader Saudi Arabia and non-OPEC Russia have agreed a preliminary deal to extend existing record oil output cuts by one month while raising pressure on countries with poor compliance to deepen their cuts, OPEC+ sources told Reuters.
  • OPEC+ agreed to cut output by a record 9.7 million barrels per day, or about 10% of global output, in May and June to lift prices battered by plunging demand linked to lockdown measures aimed at stopping the spread of the coronavirus. Rather than easing output cuts in July, OPEC and its allies, a group known as OPEC+, were discussing keeping those cuts beyond June

(Source: Reuters)

House Gives More Time To Achieve Debt To GDP Target Published: 29 May 2020

  • The House of Representatives on Wednesday (May 27), approved amendments to the Financial Audit and Administration (FAA) Act to postpone Jamaica’s target of reducing debt to gross domestic product (GDP) to 60 per cent, by two years.
  • In his address, Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, pointed out that arising from the disruptions caused by the COVId-19 pandemic, Jamaica’s real GDP for financial year 2020/21 is forecast to contract by 5.1 per cent, compared to an expansion of 1.1 per cent that informed the approved Estimates of Expenditure tabled in February.
  • “The fallout in real economic activity will adversely impact the public sector’s revenue stream, thereby necessitating sharp reorientation of public expenditure. At the same time, the Government must and has been responding swiftly and decisively to effectively mitigate the impact of the pandemic,” Dr. Clarke said.
  • He noted that given the unprecedented fiscal burden posed by the pandemic, the Government will require more time to reduce the public debt to 60 per cent of GDP. The legislation will facilitate the extension of the timeline from March 31, 2026 to March 31, 2028.

(Source: JIS)

Government Reviews Vision 2030 National Development Plan Published: 29 May 2020

  • The Government has commenced work to review and revise the requisite strategic actions for implementing the country’s long-term National Development Plan – Vision 2030 Jamaica – in light of the impact of the coronavirus (COVID-19) pandemic.
  • “Speaking at a digital quarterly media briefing on May 27, Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wayne Henry, said the revamping exercise includes revisiting the targets up to 2030 and the period/schedule for achieving the planned outcomes and national development goals.
  • “This process has commenced with Government-led strategic actions and plans from various sectors, including programme revisions and reviews, in an effort to adapt to the challenges, shocks and risks presented by the global pandemic,” he indicated.
  • Noting that the Government is not yet in a position to present revised long-term development targets, Dr. Henry said that from the PIOJ’s preliminary review of the development targets, it is anticipated that based on projections for the Jamaican and wider global society and economy, “there will be slippages in several indicators”.
  • Henry pointed out that prior to the COVID-19 pandemic, the country, in pursuit of Vision 2030 Jamaica, had entrenched macroeconomic stability as evidenced by low unemployment and inflation rates, a declining debt-to-GDP ratio, and seven consecutive years of economic growth.

(Source: JIS)

LatAm, Caribbean countries call for new governance, rules for financing Published: 29 May 2020

  • If the COVID-19 pandemic has done nothing else, it has exposed the vulnerabilities and weaknesses of the global financial system and the mechanisms currently in place to help developing nations establish stronger economies, leaders from both rich and poor countries acknowledged in a United Nations-led forum on Thursday.
  • Convened by Holness, as well as Canadian Prime Minister Justin Trudeau and UN Secretary General António Guterres, the discussion focused on trying to find concrete financing solutions to the COVID-19 health and development emergency unleashed by the pandemic.
  • The leaders discussed how the need for a revamping of the system of global financial and monetary governance, as well as putting an end to opaque structures that facilitate tax evasion and illicit financial flows that rob resources from developing countries. 
  • In addition, the leaders, which also included heads of Latin American, Caribbean and international financial institutions, discussed changing financing rules to include middle-income debt alleviation, rules for access to financial resources, and concessional funding related to COVID-19 and beyond.

(Source: Latinfinance)

Mexican economy could shrink up to 8.8% in 2020 - central bank Published: 29 May 2020

  • Mexico’s central bank on Wednesday said the economy could contract by as much as 8.8% in 2020 as it published a range of forecasts for this year due to the coronavirus pandemic, followed by a likely recovery in 2021.
  • The bank said the downturn could see economic contraction of between 4.6% and 8.8% this year, revising down its forecast from an earlier estimate of 0.5-1.5% growth in 2020.
  • Depending on the shape of the rebound, and whether it is so-called V-shaped or a U-shaped recovery, the bank said growth in 2021 could range from -0.5% to 4.1%.

(Source: Reuters)

Signing, responding Published: 29 May 2020

  • President Donald Trump appears poised to sign a measure passed by Congress which would target Chinese officials for abusing the human rights of the country's Muslim minority.
  • In a parallel move, Trump told reporters he's preparing to announce new polices on China in response to Beijing's imposition of national security legislation on Hong Kong.

(Source: Bloomberg)

Powell control Published: 29 May 2020

  • Federal Reserve Chairman Jerome Powell takes part in a moderated virtual discussion with former Fed Vice Chairman Alan Blinder from 11:00 a.m. Eastern Time.
  • While the market sees a lower chance of negative rates, the range of Fed tools is likely to be discussed. Latest data shows its holdings of corporate debt ETFs rose to almost $3 billion, while the weekly balance sheet added a line item for muni bond purchases.
  • It is also likely that Powell will be asked to comment on whether policy makers will engage in yield-curve control, as flagged by New York Fed President John Williams earlier this week.

(Source: Bloomberg)

Increased Expenses Chips Away Some of Elites Profit Published: 28 May 2020

  • Despite a 20.1% (or $58.04Mn) increase in revenue, Elite Diagnostic Limited recorded a 16.4 contraction in net profit for the nine months ended March 31, 2020. Net profit declined to $19.07Mn (EPS: 5¢) from $22.81Mn (EPS: 6¢) reported in the corresponding period in 2019.
  • The main contributor to this performance was increased expenses: administrative expenses increased 8.0% (or $9.60Mn), depreciation expenses climbed 32.1% (or $13.40Mn), while finance cost increased by 13.0% (or $1.80Mn).
  • Elite Diagnostic Limited stock price has fallen by 31.9% since the start of the calendar year, and closed Wednesday’s trading session at $3.40.  The stock currently trades at a P/E of 24.3x earnings, which is above the Junior Market Average of 19.6x.

(Source: Elite Financials)

Profit More Than Doubles at GENAC Published: 28 May 2020

  • General Accident Insurance Company Jamaica Ltd. reported unaudited net profit of $74.72Mn (EPS:7¢) for the three months ended March 31, 2020, representing a 142.0% growth in the bottom line relative to the $30.87Mn (EPS: 3¢) made in the same period of 2019.
  • This performance was driven by a 38.1% ($184.94Mn) increase in net premiums earned, a 59.8% (or $18.56Mn) increase in investment income as well as a 56.0% (or $108.27Mn) decline in commission expense.
  • The stock has fallen 9.2% since the start of the calendar year. GENAC closed Wednesday’s trading session at $6.45 and currently trades at a P/E of 11.1x earnings which is below the Junior Market Financial Sector Average of 23.9x. 

(Source: GENAC Financials)