• JMMB Holding Company, SRL and its parent JMMB Group Limited have received final regulatory approval for the purchase of 100% of the shares in Banco Múltiple Bell Bank, S.A. in the Dominican Republic as well as to merge said entity with Banco Ahorro y Crédito, JMMB Bank, SA on July 28, 2022.
• This is a significant milestone for the JMMB Group, as this will be their first commercial bank in the Dominican Republic.
• The JMMB DR Group currently includes the brokerage house, JMMB Puesto de Bolsa SA, a fund management company, JMMB Funds, and a pension fund administrator company AFP JMMB BDI, S.A.
• This acquisition and merger complement their regional diversification strategy as the company seeks to more effectively fulfil the financial needs of the local market in the Dominican Republic.
• Along with diversifying the company’s revenue streams, the acquisition is expected to further improve the company’s bottom line which saw a 54.2% increase in the last financial year (March 2022) over its prior period.

(Source: JSE)

• The Jamaica-based creative company, iCreate Limited is seeking to raise some J$425Mn in capital to continue its expansion programme, in particular the acquisition of Visual Vibes.Com Limited, one of the leading video board advertising companies in the country.
• The company requires additional funding to continue to execute its growth strategy through mergers and acquisitions. On May 19, the board of directors of the company passed a resolution, subject to the approval of the shareholders, authorizing raising J$425Mn by way of a Rights Issue, offering to the existing shareholders the opportunity to subscribe for additional ordinary shares in the company.
• Subsequent to this, on July 18, iCreate’s board of directors passed another resolution, subject to the approval of the shareholders, authorising the acceptance of convertible debt financing of J$100 million and US$400,000 to be provided by Astronomical Holdings Limited and Kintyre Holdings Limited, respectively.
• The loans will be converted to ordinary shares at a conversion price as will be the same as the subscription price fixed for the ordinary shares proposed to be made available for subscription according to the Rights Issue.
• The company is convening a hybrid extraordinary general meeting, scheduled to be held on Thursday, August 25, 2022, to vote on its proposed rights issue and approval of convertible debt financing.
• The shareholders are being asked to vote on a resolution to authorize the subscription of new ordinary of up to $212.5Mn ordinary shares (with the option to upsize as the directors in their absolute discretion may approve). The same allotment of $212.5Mn shares will be made available as per the debt financing conversion to equity holding to amount to the full funding requirement of $425Mn.

(Source: JSE)

• According to a Reuters poll, Mexican inflation in July will likely speed up again to a near-22-year high, fueling bets the country's central bank will continue to hike its key interest rate through the rest of the year.
• Notably, Mexico's central bank, which targets inflation at 3% plus or minus one percentage point, has raised its benchmark interest rate by 375 basis points over its last nine monetary policy meetings, to 7.75%.
• With annual core inflation, which strips out some volatile food and energy prices, is forecast to reach 7.60%, also the highest since late 2000, the market is expecting a further 75-basis-point hike at the bank's next rate decision scheduled for Thursday. Analysts are projecting that the total interest rate will hit 9.5% by the end of the year.

(Source: Reuters)

• Barbados will soon be home to a World Food Programme logistics hub which will make it easier for food supplies to be transported to Caribbean countries impacted by natural disasters.
• The programme will set up its hub giving it easy access to the runway, Barbados’ network and the rest of the Caribbean.  The main component of the hub will be a large warehouse that will allow the World Food Programme to pre-position food and other necessary supplies for the aftermath of a disaster.
• The government plans to play a role in the logistics centre to benefit Barbadians and other Caribbean nationalities. Of note, after hurricanes Maria and Irma ravaged neighbouring nations, especially Dominica, it became evident that the program's presence in the region was inadequate.
• The hub can improve access to healthy foods in low-income or underserved areas by making it easier for farmers to offer their products in these areas by assuming costs associated with infrastructure and logistics.
• That said, Barbados stands to benefit as logistics hubs add value by lowering the costs of transportation, storage, and distribution of commodities from producer to consumer, boosting business competitiveness.

 (Source: Barbados Today)

• The United States will provide an additional $4.5 billion to Ukraine's government, bringing its total budgetary support since Russia's February invasion to $8.5 billion, the U.S. Agency for International Development said on Monday, August 8^th, 2022.
• The funding, coordinated with the U.S. Treasury Department through the World Bank, will go to the Ukraine government in tranches, beginning with a $3 billion disbursement in August, USAID, the Agency for International Development, said.
• It follows previous transfers of $1.7 billion in July and $1.3 billion in June, USAID said. Washington has also provided billions of dollars in military and security support. The Pentagon announced a $1 billion arms aid package on Monday, August 8th, 2022. Overall, the United States has contributed more than $18 billion to Ukraine this year.
• The new budgetary funds are to help the Ukrainian government maintain essential functions, including social and financial assistance for the growing poor population, children with disabilities, and millions of internally displaced persons, as the war drags on.
• However, it is important to note that the World Bank estimates that 55% of Ukrainians will be living in poverty by the end of 2023 as a result of the war and the large numbers of displaced persons, compared with 2.5% before the start of the war.

(Source: Reuters)

• A sweeping bill passed by the U.S. Senate on Sunday, August 7^th,2022, is intended to fight climate change, lower drug prices, raise some corporate taxes, bring down inflation over the medium to long term, and cut the deficit, rating agency Moody's Investors Service told Reuters on Monday, August 8th, 2022.
• The Senate on Sunday, August 7th,2022, passed the $430 billion bill, a major victory for President Joe Biden, sending the measure to the House of Representatives for a vote, likely Friday. They are expected to pass it and send it to the White House for Biden's signature.
• The legislation, known as the Inflation Reduction Act, however, will not bring down inflation "this coming year or next year," said Madhavi Bokil, senior vice president at Moody's Investors Service. "We do think that this act will have an impact (of cutting inflation) as it increases productivity," she said, adding her horizon was two to three years.
• However, it was argued by the Republicans, that the bill will not address inflation, and have denounced it as a job-killing, left-wing spending wish list that could undermine growth when the economy is in danger of falling into recession.
• Nonetheless, Bokil mentioned that the spending bill was complementary to another bill recently passed by Congress, which aimed to subsidize the U.S. semiconductor industry and boost efforts to make the United States more competitive with China.

(Source: Reuters)

• Prime Minister, the Most Hon. Andrew Holness, says the opening of the Kingston Logistics Park (KLP) is a significant investment and will bring more economic growth and job creation for the country.
• The Kingston Logistics Park, which incorporates 18,000 square metres of warehouse space, falls under the wider Logistics Hub Initiative (LHI) designed to position the country as a global destination in cargo trans-shipment and logistics services.
• The Park includes a border-protection centre, which houses the Jamaica Customs Agency (JCA) and the Container Security Initiative, which is a collaboration between the JCA and the United States Government.
• The development will see the country using its local and natural resources to build its logistics industry and cement itself as an important logistics node. This will result in the creation of a new industry that will provide higher quality jobs and a new stream of foreign exchange revenues that will make the economy more robust to withstand shocks.

(Source: JIS News)

• Local insurers, Key Insurance Limited (KEY) and Caribbean Assurance Brokers Limited (CABROKERS), reported improvements in their bottom line for the six months ended June 2022. KEY reported a net profit of J$12.25Mn (EPS$0.02), a 576.3% year-over-year improvement, while CABROKERS recorded a net profit of J$4.45Mn (EPS $0.02) versus a loss of J$21.32Mn in 2021.
• Both KEY (20.6%) and CABROKERS (17.9%) saw double-digit increases in revenues as business activity increased. KEY’s improved performance was attributable to improvement in both the insurance and investment segments of the business, while CABROKERS saw improved commission income from all four areas (International, Individual Life and General and Employee Benefits).
• Administrative and other expenses for KEY increased by 20.3% while CABRROKERS operating expenses increased by a marginal 1.2%. KEY also saw a 25.4% uptick in claims expenses for the review period.
• Both companies will have to navigate the headwinds impacting the global and local economy to ensure that shareholders’ value is protected. We expect KEY will continue to reposition its investment portfolio to optimize yields and drive interest income considering the rising interest rate environment. There will also be sustained efforts to improve underwriting practices to drive lower underwriting losses in the coming quarters and better value for shareholders.
• CABROKERS is targetting customer retention and business development strategies to enhance future profitability. This includes a focus on improved customer satisfaction through digital transformation and the creation of faster, more personalized service to drive revenues.
• KEY’s stock price has decreased by 4.6% since the start of 2022, while CABROKERS’ has increased by 10.8% to close Friday’s trading session at $3.84 and $2.52, respectively. KEY currently trades above the Main Market Financial Sector Average of 10.3x at a P/E of 12.0x. On the other hand, CABROKERS currently trades below the Junior Market Financial Sector Average of 13.6x at a P/E of 8.1x.

(Sources: JSE & NCBCM Research)

• Fitch Solutions revised its end-2022 interest rate forecast for Brazil from 13.75% to 14.00%, after the Banco Central do Brasil (BCB) left the door open to extending its hiking cycle through its September meeting. The total hikes in the BCB’s hiking cycle since February 2021 currently amounts to 1,175bps, one of the most aggressive cycles in the world.
• It is anticipated that the BCB will enact one final 25bps rate hike at its September meeting, as inflation expectations are not expected to moderate significantly for Q1 2024 - the period on which the BCB has indicated that they are focused on, mitigating the impact of temporary tax measures. Furthermore, Brazil's labour market has performed admirably this year, providing the bank additional leeway to raise interest rates.
• The BCB will begin progressively lowering its benchmark rate in 2023, to reach 11.00% by the end of the year. This is a significant increase above Fitch's earlier prediction of 9.75%, reflecting both the higher end point for 2022 and the higher inflation revision for 2023, which will likely push the BCB to take a more gradual approach. Given that rates are expected to stay relatively high in the medium term, borrowing costs in Brazil will remain high, impacting the country's economic development prospects.

(Source: Fitch Solutions)

• The Central Bank’s governor yesterday trimmed the Bahamian economic growth forecast for 2022 “to at least 5%” from 6% while warning that the cost-of-living crisis facing many families has yet “to peak”.
• John Rolle, speaking as the regulator unveiled its half-yearly economic and financial update, said Bahamians should expect to see higher US inflation rates, which are running at 40-year record highs and hit 9.1% last month, increasingly reflected in the price of goods and services sold locally.
• While official measures place Bahamian inflation below 5% (the Central Bank’s report pegged it at 3.8% for the year to April 2022), the country’s dependence on US imports – and inability to influence prices itself - means consumers should brace for further increases.
• According to Mr Rolle, while Bahamian inflation has "not yet reached the same level indicated in the US," the average inflation rate in The Bahamas will continue to move a bit higher in the near term.
• One counter to inflation, and where the country has seen some “head off” has been on electricity (energy) costs that have been somewhat contained via the fuel hedging initiatives employed by Bahamas Power & Light (BPL) and Grand Bahama Power Company.
• It is unclear, though, how long BPL will be able to hold fuel costs at their current level given the ongoing doubts about the status of its fuel hedging initiative and whether the Government is subsidising the utility’s fuel costs - something it is supposed to be blocked from doing by law under regulations passed in 2020.
• Low-income Bahamians, especially, but also those in the middle class as well as on fixed incomes such as pensioners, have been hit hard by food and gas price increases in the wake of COVID-19. Wages have largely remained stagnant, which has resulted in living standards for many eroding while the cost of living remains high.
• As for the overall economic outlook, the Central Bank governor indicated that despite the slight revision downwards the economy is projected to grow at a healthy pace of at least 5% in 2022, and gains are also expected in 2023, continuing to reflect a bounce back from COVID-19.

(Source: The Tribune)