• The Minister of Tourism, David Collado, revealed that the Dominican Republic continues to reach unprecedented numbers in the tourism sector by registering the arrival of 792 981 non-residents in July of this year alone, making it the best month in the entire history of the country and surpassing July and December 2022, which had been until now the only months in which the government had managed to break the barrier of 700,000 tourists.
• He reported that of the 792 981 tourists, 652,506 were foreigners and 140,475 Dominicans, representing a growth of 34% over 2019, 41% over 2021, and 8% over last year. The official said that sustained growth is also reflected in the cruise industry after noting that the country received 148,560 cruise passengers by sea in July alone.
• He further noted that in the January-July period, 1,416,011 cruise passengers arrived in the Dominican Republic, “something never seen before in the history of tourism”. “If we add the 792,981 tourists who arrived last month by air and the 148,560 visitors who arrived by sea, we are talking about 941,541 visitors. Something historic in the month of July,” said Collado.
• He also indicated that for the first time, the country registered the arrival of 6,295,667 visitors in the first seven months of the year. He detailed that the Dominican Republic received 4,879,656 tourists in January-July, plus 1,416,011 cruise passengers.
• The central countries of origin of tourists in July were the United States with 54%, Canada with 8%, Puerto Rico with 5.1%, Colombia with 3.7%, as well as Spain. The top cities were New York, with 6.8%, followed by Miami, Bogota, Lima, and Santiago.

(Source: Dominican Today)

• The "growth acceleration" plan recently launched by Brazil foresees 1.7 trillion reais (US$347.5 billion) in investments that will rely increasingly on public-private partnerships; while driving a new ecological transition plan, the government said.
• The programme, known under its Portuguese acronym PAC, revisits an initiative that President Luiz Inacio Lula da Silva first introduced in 2007 during his earlier term in office to raise investments in energy, logistics, and urban and social infrastructure.
• It was later expanded under his successor, former President Dilma Rousseff. Critics say it incurred excessive spending, exacerbating Brazil's fiscal crisis, while failing to bring fundamental advances in infrastructure.
• This time Lula's government says the plan will follow a path marked by stronger partnerships between the public and private sectors, with more than 1.3 trillion reais estimated to be disbursed by 2026.
• According to the government, 371 billion reais - or 22% of the total - are set to be invested by the federal government, while state-owned firms such as oil giant Petrobras would inject 343 billion reais. The private sector is seen investing a total of 612 billion reais.
• The government did not immediately detail the fiscal impact of the initiative, or give a specific time frame for the plan.
• Even though the plan includes several projects in the oil and gas sector led by Petrobras and investment in the pre-salt offshore oilfields, Lula's team emphasized its environmental goals and announced an "ecological transition plan."
• Finance Minister Fernando Haddad said the ecological plan would be focused on establishing a regulated carbon credit market, issuing sustainable sovereign bonds and reformulating a climate fund that aims to bring down emissions. "We'll accelerate growth in our country and help stop the degradation of our planet," Haddad said in a speech.

(Source: Reuters)

• Treasury yields resumed their climb this week with two-year yields approaching 5% and 10-year yields just off their post-pandemic highs. The potential for a higher neutral real rate is one reason yields are rising. Not only has real GDP growth held up at 2%+, but it also appears to be broadening away from services spending. A strong retail sales reading on August 15 would confirm that the goods spending is once again expanding.
• Treasury yields are rising. One of the most important structural drivers of the move higher in yields is building evidence that the neutral real rate of interest, is at least temporarily more elevated. If that’s the case it would mean a more extended period of higher rates would be warranted and that longer-term yields might need to rise higher to slow the economy.
• The focus of spending in the US shifted to services after the pandemic, and this made strong GDP growth look less sustainable. Recession expectations were partially premised on services spending slowing down without other components of growth offsetting the services slowdown.
• Instead of softening as projected, Q2 GDP showed a broadening of growth to categories like business equipment investment. Housing which had been a drag is now poised to offer a positive contribution in Q3.
• The manufacturing sector is in contraction, but Purchasing Managers Index PMI) and Institute for Supply Management (ISM) readings are just sub-50 and stronger durables orders across categories suggest above-50 readings may not be far off. Relatedly, it appears that goods spending is once again expanding.

(Source: Citi Research)

• TransJamaica Highway Limited recorded a net profit of US$6.03Mn for the quarter of its that ended June 30, 2023, a 343.8% yoy increase in profitability. The first half of the year also witnessed strong financial performance with profits totalling US$11.01Mn, marking a  441.9% increase when compared to the same period of the previous year.
• For the quarter ended June 30, 2023, the Group had revenue of US$18.22Mn, reflecting an 18.2% increase compared to revenue of US$15.41Mn for the same quarter in 2022. Revenue for the six months ended June 30 2023 was US$36.21Mn, compared to US$30.29Mn for the same period in 2022, an increase of 19.6%. This was due to greater levels of traffic over the previous year in addition to movements in the toll tariff which is reviewed annually.
• Operating expenses for Q2 2023 were US$5.47Mn, a notable 42.3% drop from the US$9.48Mn in Q2 2022. The first half of the year also saw decreased operating expenses, dropping from US$19.24Mn to US$10.96Mn, a 43.0% decline. This decrease is mainly due to cost savings from the acquisition, which enabled fee modifications, hence lowering operational costs. This was however offset by higher consultancy fees as the company has undertaken an exercise to restructure its operations, higher amortization cost of intangible assets associated with more traffic, higher marketing cost associated with promoting the usage of my t-Tag App and also to encourage greater usage of the Tags, as well as higher insurance cost and security maintenance costs.
• Administrative expenses, largely consisting of staff costs, plant and equipment depreciation, and regular office expenditures, were US$2.00Mn for Q2 2023. This represents a rise of US$1.68Mn from US$0.32Mn in Q2 2022, primarily because of the subsidiary's staff and related costs. For H1 2023, administrative expenses were US$4.06Mn, up by US$3.40Mn from the US$0.66Mn in H1 2022, influenced by similar factors and higher consultancy fees.
• TJH’s stock price has increased by 80.7% since the start of the calendar year. The stock closed Monday’s trading session at $2.53 and currently trades at a P/E of 13.4x which is below the Main Market Energy, Industrial, and Materials Sector Average of 15.6x.
• While the JIO acquisition led to a one-time settlement loss of US$13.9Mn, TransJamaica is set to benefit in the long run. Anticipated annual cost savings exceeding 50% (approx. US$12Mn) will significantly cut operating expenses and boost profitability. The reopening of schools in September is likely to augment traffic, further enhancing revenue. These combined factors are poised to uplift TransJamaica's financial performance in the upcoming quarters.

(Sources: JSE and NCBCM Research)

• Local investors can trade shares issued on the Canadian market using select local brokers under the newly introduced Direct Market Access portal by the Jamaica Stock Exchange.
• This will allow Canadian stocks to be available for trading through brokers Cumax Wealth Management and Barita Investments, eliminating the need to set up an account at a Canadian brokerage house.
• The Jamaican brokers will execute the orders of their clients through the DMA portal.
• The JSE plans to expand the platform to other exchanges abroad and will eventually allow overseas investors in those territories to buy shares listed on the Jamaica market through the DMA.
• The next phase will expand access to additional exchanges around the globe.
• The JSE's new DMA platform makes international trading easier for Jamaican investors. This not only provides more options for local investors but also strengthens Jamaica's ties with global markets. This development is good news for investors looking for diverse opportunities and for the overall growth of the capital market.

(Source: RJR News)

• The Bahamian economy will grow at a weaker pace than the Caribbean average of 3.1% over Fitch Solution’s 10-year forecast period.
• Bahamas' real GDP will grow by 4.4% in 2023, from an estimated 14.4% growth in 2022, driven by growing output in all GDP components. In particular, private consumption will grow by 4.0% in 2023, from an estimated 7.7% expansion in 2022. Investment will grow by 3.0%, and government consumption will grow by 0.5%, compared with an estimated 9.7% contraction and an estimated 19.0% expansion in 2022, respectively. Net exports will add 1.4 percentage points (pp) to real GDP in 2023 after adding an estimated 10.8 pp in 2022.
• Additionally, economic activity in 2024 will be driven by growing private consumption, net exports, and investment, prompting the Bahamas' real GDP to grow by 1.8% in 2024 from a 4.4% expansion in 2023. Private consumption will increase by 2.0% in 2024, on par with its 2.9% average growth since 2013. Investment will grow by 1.5% in 2024, from a 3.0% growth in 2023. Government consumption will decline by 1.0% in 2024, from 0.5% growth in 2023. Net exports will add 0.4pp to real GDP in 2024, after adding 1.4pp in 2023.
• Through to 2032, private consumption will drive average real GDP growth of 2.5%. Fitch expects private consumption, which accounted for 68.2% of GDP in 2022, to average 2.1% growth from 2023 to 2032. Net exports, investment, and government consumption increases over the same period will support overall economic activity.
• On the fiscal side, the market's fiscal accounts have remained in deficit in recent years, and Fitch estimates that the fiscal deficit will come in at 0.8% of GDP in FY2023 (July 2022-June 2023) from an estimated deficit of 5.8% of GDP in FY2022. Revenues contracted by an estimated 7.8% in FY23 after a 36.7% increase in FY22. Expenditure fell by an estimated 24.5% in FY23 after a 2.6% increase in FY22. Consequently, Fitch expects that the debt-to-GDP ratio will decrease to an estimated 85.0% of GDP in FY23 from 87.2% of GDP in FY22.

(Source: Fitch Solutions)

• The Bank of Mexico maintained its benchmark interest rate at 11.25% on Thursday, August 10, in line with analysts' forecasts, underscoring that the inflationary outlook remains "very complex" and suggesting the rate could hold steady for a while.
• The unanimous decision by the central bank's five-member board is the third consecutive rate hold since Banxico, as the Bank of Mexico is known, halted a two-year hiking cycle in May amid easing inflation.
• While falling inflation has elicited rate cuts elsewhere in Latin America, Banxico has taken a more cautious approach as inflation in Latin America's second-largest economy remains above the bank's official target of 3%, plus or minus a percentage point.
• "In order to achieve an orderly and sustained convergence of headline inflation to the 3% target, the board considers that it will be necessary to maintain the reference rate at its current level for an extended period," the bank said in a statement.
• Rate cuts in Mexico are unlikely until late 2023, analysts say, even as central banks begin easing their monetary policy. Notably, annual inflation in Mexico slowed for the sixth consecutive month in July, official data showed, landing at 4.79%, but still above the central bank's target.
• While Banxico expects inflation to converge to its 3% target late next year, it said the inflationary outlook will be complicated and uncertain throughout the entire forecast horizon, with upward risks. In recent weeks, central banks in Brazil, Chile, Costa Rica, and Uruguay have cut their interest rates after aggressive monetary tightening cycles.

(Source: Reuters)

• Swiss bank UBS agreed to pay a combined $1.4 billion in civil penalties over fraud and misconduct in its offering of residential mortgage-backed securities dating back to the global financial crisis, federal prosecutors announced Monday.
• The settlement concludes the final case brought by the U.S. Department of Justice against several of the largest financial institutions over misleading statements made to the purchasers of those mortgage-backed securities. The cumulative recoveries in the cases now total $36 billion, according to the Justice Department.
• In the years leading up to the financial crisis, investment banks packaged, securitized and sold bundles of mortgages to institutional buyers. Those securities were rated and graded according to quality, with various “tranches” of mortgages hypothetically safeguarding against the risk of a complete default.
• However, unbeknownst to the buyers, those mortgages were not as high quality as their ratings suggested. UBS, similar to other banks that settled with the Justice Department, were aware that the mortgages underneath the mortgage-backed securities didn’t comply with underwriting standards.
• UBS conducted “extensive” due diligence on the underlying loans before it created and sold the securities to its clients, prosecutors alleged, and despite knowing of the significant issues with the products, continued to sell them for financial success.

(Source: CNBC)

• Swiss bank UBS agreed to pay a combined $1.4 billion in civil penalties over fraud and misconduct in its offering of residential mortgage-backed securities dating back to the global financial crisis, federal prosecutors announced Monday.
• The settlement concludes the final case brought by the U.S. Department of Justice against several of the largest financial institutions over misleading statements made to the purchasers of those mortgage-backed securities. The cumulative recoveries in the cases now total $36 billion, according to the Justice Department.
• In the years leading up to the financial crisis, investment banks packaged, securitized and sold bundles of mortgages to institutional buyers. Those securities were rated and graded according to quality, with various “tranches” of mortgages hypothetically safeguarding against the risk of a complete default.
• However, unbeknownst to the buyers, those mortgages were not as high quality as their ratings suggested. UBS, similar to other banks that settled with the Justice Department, were aware that the mortgages underneath the mortgage-backed securities didn’t comply with underwriting standards.
• UBS conducted “extensive” due diligence on the underlying loans before it created and sold the securities to its clients, prosecutors alleged, and despite knowing of the significant issues with the products, continued to sell them for financial success.

(Source: CNBC)

• The U.S. dollar hit more than a one-month high on Monday as investors sought a safe haven due to concerns about China's economy, and traders braced for possible Japanese government intervention after the yen hit its lowest level since November.
• A source told Reuters that Country Garden, China's largest private developer, is seeking to delay payment on a private onshore bond for the first time, in a new sign of stress in the sector.
• Meanwhile, two Chinese listed companies said at the weekend they had not received payment on maturing investment products from asset manager Zhongrong International Trust Co.
• "A lot of traders are focusing again on China," said Edward Moya, senior market analyst at OANDA. "I think there's so much concern with just their growth outlook, with their current property crisis, and I think one of the biggest wealth managers not being able to meet their debt obligations is a big red flag."

(Source: Reuters)