• The oil and gas industry underwent a significant $250Bn buying spree in 2023, marked by major acquisitions from Exxon Mobil, Chevron Corp, Occidental Petroleum, and ConocoPhillips. The focus was on securing lower-cost reserves, with the Permian Basin emerging as a key target, positioning these companies to control around 58% of future production in the region.
• The acquiring companies aim to collectively pump at least 1 million barrels per day from the Permian Basin, which is expected to produce 7 million barrels per day by the end of 2027. A surge in oil demand, driven by the recovery from the pandemic downturn, has fueled optimism among acquirers.
• The consolidation trend is expected to have spillover effects on oilfield service companies and pipeline operators. With fewer customers holding more pricing power, service companies may face squeezed margins as contracts are renegotiated.
• Pipeline operators are experiencing their consolidation wave, with fewer new oil and gas pipes being approved and built. However, expansions to existing lines out of the Permian Basin will provide some relief.
• Acquisitions in 2023 were largely facilitated by strong stock prices, reducing the need for significant cash outlays. Rising interest rates made stock swaps more attractive than funding new renewable energy projects.
• However, the consolidation has prompted regulatory scrutiny, with U.S. antitrust regulators seeking additional information from Exxon and Chevron. The companies express confidence in approval but acknowledge the potential tension with governments prioritizing a shift to clean energy sources.

(Source: Reuters)

• U.S. retail sales increased by 3.1% between Nov. 1 and Dec. 24, slightly below Mastercard's earlier forecast and significantly lower than the previous year's growth, with factors like higher interest rates and inflation impacting consumer spending.
• Amazon and Walmart intensified promotions in November, with discounts perceived to be less profound than last year. Shoppers, remaining price-conscious, delayed purchases until Black Friday and Cyber Monday, culminating in a final surge on Super Saturday.
• E-commerce sales grew at a slower pace (6.3%) compared to the prior year (10.6%), indicating a moderation in online shopping after the pandemic highs.
• Apparel and restaurant sales increased (2.4% and 7.8%, respectively), while electronics sales saw a slight decline (0.4%) during the holiday shopping period.

(Source: Reuters)

• The Jamaica Stock Exchange (JSE), in paving the way for more cross-border listings locally, has signed its latest memorandum of understanding (MOU) with the Nairobi Securities Exchange (NSE) in Kenya in a move to forge stronger ties with Africa.
• In welcoming the historic partnership, the managing director of the JSE, Marlene Street Forrest, said it unlocks an enormous opportunity for the cross-listing of stocks and other investments by locals in the African country and vice versa.
• The JSE, now partnering with a growing list of countries across Africa, signed an MOU with Ghana last year and remains in dialogue with other states, such as Sierra Leon, as it works to strengthen African-Caribbean relations. Banking on the tenets of commonality, a shared past, and common objectives, markets across both regions believe they can work together for the common good.
• Ugas Mohamed, chair of the Capital Markets Authority in Kenya, mentioned that the key areas targeted for collaboration under the recent MOU were capacity building through knowledge transfer, joint training programmes, and possible cross-listings.
• The JSE aims to build out its green bond portfolio in 2024 and expressed an interest in learning from the NSE’s experience in this area. Importantly, this collaboration will unlock new opportunities for Jamaica, enhance market liquidity, and provide investors with diversified and innovative product offerings.

(Source: JSE)

• For December 2023, the Bank of Jamaica (BOJ) projects that the value of currency issued by the Bank will increase by approximately $29.7Bn (or 11.7%) relative to the currency stock at the end of November 2023 ($253.7Bn). Currency stock refers to all Jamaican notes and coins held outside the Bank of Jamaica.
• The projected currency stock of $283.4Bn at the end of December 2023 represents an annual growth rate of 21.2% compared to 3.0% for 2022. The projected growth is consistent with higher cash demand for the calendar year 2023 to date and reflects continued growth in both real Gross Domestic Product (GDP) and the prices of goods and services. The projected growth also reflects an increase in vault cash amid a slow return of old currency notes to the Bank of Jamaica.
• When the forecasted change in the general level of consumer prices is considered, the currency stock in real terms is projected to increase by 12.9%, which compares to the real decline of 5.8% for the previous year.
• Typically, the BOJ issues and redeems notes and coins daily in order to meet the demand for cash from individuals and businesses. There is normally a stronger demand for currency during the month of December, associated with increased spending over the holiday period. Financial institutions, therefore, request more currency from BOJ to satisfy this demand.

(Source: BOJ)

• Antigua and Barbuda’s EC$1.9Bn 2024 national Budget (Appropriation Bill 2023) has been passed by the House of Representatives without the approval and participation of the opposition members.
• Prime Minister Gaston Browne, who is also the Minister of Finance, criticised the opposition for their boycott of the budget debate, which ended on Tuesday night. The Ministry of Education, Creative Industries and Innovations has been allocated the largest proportion of the budget at $198.6 Million.
• The Prime Minister’s Ministry and the Ministry of Finance and Public Private Partnerships received $177.7Mn, while the Ministry of Health, Wellness, Social Transformation and the Environment was allocated $160.5Mn.
• Some measures included in the Budget are the implementation of a 10% excise tax on alcohol, tobacco, and cannabis products, increasing the Antigua and Barbuda Sales Tax rate from 15% to 17%, and the introduction of an environmental charge.

(Source: Caribbean Loop News)

• Suriname is set to receive US$53Mn from the International Monetary Fund (IMF) following the completion of the fourth review under the Extended Fund Facility (EFF) arrangement, totalling an estimated US$263Mn.
• The IMF executive board approved Suriname's request for an augmentation of access (US$63Mn) and an extension of the EFF arrangement until end-March 2025, bringing the total expected access under the arrangement to about US$577Mn.
• Suriname is implementing an ambitious economic reform agenda focusing on fiscal and debt sustainability, social protection, monetary and exchange rate policy upgrades, financial sector resilience, and anti-corruption measures.
• IMF Deputy Managing Director Kenji Okamura commended Suriname for its commitment to fiscal discipline and macroeconomic stabilization, noting positive trends such as a stabilising economy, eased exchange rate pressures, and a downward trend in inflation. Swift implementation of reforms, debt restructuring, and continued efforts to address vulnerabilities are needed for sustained progress.

(Source: Reuters)

• Developing countries are facing significant debt challenges, marked by a surge in sovereign Eurobond principal payments, reaching $78.4Bn in 2024, up from $43.6Bn in the current year. Further, lower-rated emerging sovereigns are set to grapple with a substantial increase in their debt bill, rising to over $65Bn for 2024 and 2025 combined, compared to just over $8.0Bn this year.
• However, investors are optimistic due to the U.S. Federal Reserve's shift from monetary tightening, which is expected to inject more cash into riskier assets, including emerging market debt. Despite potential risks such as a developed-world recession, ongoing wars, and political uncertainties, investors believe a widespread wave of emerging market defaults is unlikely.
• With improved borrowing prospects, gulf countries like Bahrain and Turkey seem well-prepared to manage their debt maturities. Concerns persist for some African sovereigns with high interest rates and low credit ratings, as evidenced by the default situations in Ghana Zambia, and the potential for Ethiopia.
• Limited sovereign bond issuance in 2023 creates opportunities for increased lending in the coming year, as global rate cuts could potentially reopen market access for many countries. However, challenges, including elevated interest rates and low credit ratings, may hinder some African sovereigns from participating in international bond markets despite improved global conditions.
• While the risk premium for emerging market hard-currency debt has narrowed, various risks, such as pending U.S. elections and ongoing global economic uncertainties, continue to pose challenges. Despite improvements, the world is still characterised by high rates and uncertainties, making the fundamentals challenging for investors.

(Source: Reuters)

• The Canadian federal government, led by Prime Minister Justin Trudeau, is allocating over C$471Mn to Toronto to address the housing crisis and enhance affordability.
• Trudeau, whose popularity has slumped in recent months amid complaints about housing affordability, said the money would allow Toronto to fast-track nearly 12,000 new housing units over the next three years, abating the pressing housing shortage in the city.
• The allocated money comes from a CAD $4Bn fund, encouraging cities to relax zoning rules. Toronto, in return, has committed to streamlining zoning approvals, expanding affordable rental programs, reducing red tape, and facilitating non-market housing.
• The federal government's housing initiatives are part of a broader national strategy to combat housing affordability challenges. The housing crisis in Toronto, exacerbated by factors like rising interest rates and population growth, has contributed to a decline in Prime Minister Trudeau's popularity, as indicated by polls suggesting a challenging electoral landscape for the ruling Liberal party.

(Source: Reuters)

• The Bank of Jamaica’s (BOJ) Monetary Policy Committee (MPC), at its meetings on 18 and 19 December 2023, unanimously agreed to maintain the policy interest rate at 7.0%.
• Jamaica’s annual headline inflation rate at November 2023 of 6.3% was above the 5.1% at October 2023 but much lower than the peak rate of 11.8% recorded at April 2022. Core inflation (which excludes food and fuel prices from the Consumer Price Index (CPI)) was 5.6% at November 2023, generally in line with the average for the past three months and lower than the 8.4% recorded at April 2022. This trend suggests that core inflation is being contained, which bodes well for the longer-term inflation outlook.
• The key drivers of headline inflation, such as international commodity prices and shipping costs, continued to decline, and the exchange rate has remained generally stable, given the monetary policy actions as well as strong tourism and remittance inflows. Further, international oil prices have trended below the Bank’s forecast, mainly due to the weaker-than-forecasted impact of production cuts by major oil producers. Average grains prices were also well below the Bank’s forecast and are expected to remain below projections over the near term. Inflation in the economies of Jamaica’s main trading partners has also continued to decline.
• Importantly, for the BOJ, the increase in inflation in November is consequent on high domestic agricultural prices due to adverse weather and the increase in PPV fares by the government. It, therefore, views the fluctuations in inflation outside the target band as temporary.
• The risks to the inflation outlook are, however, skewed to the downside (inflation lower than projected), including the possibility that oil and grains prices could trend well below the forecast. Other downside risks also include weaker-than-expected global growth, which could have a stronger-than-projected downward pull on domestic demand and imported inflation, resulting in lower levels of price changes.
• Future monetary policy decisions will depend on the incoming data. The Committee decided to maintain heightened surveillance of the risks and core inflation. The MPC is prepared to take the necessary actions, including further tightening of monetary policy, if any upside risks to inflation materialise. The date of the next policy decision announcement is 20 February 2024.

(Source: BOJ)

• For the period January to August 2023, Jamaica’s total spending on imports was valued at US$5,078.8Mn, representing a 1.4% or US$74.5Mn decrease relative to last year, while earnings from total exports were valued at US$1,411.5Mn, 29.0% above export earnings in the corresponding 2022 period.
• The decline in imports was largely attributable to lower imports of “Raw Materials/Intermediate Goods” and “Fuels and Lubricants”, which declined by 0.6% and 19.6%, respectively.
• Meanwhile, increased exports of “Crude Materials (excl. Fuels)” drove the export gains. Domestic exports increased by 24.3% to US$1,075.1Mn compared to US$864.7Mn for the 2022 period, while re-exports increased by 46.7% to value US$336.3Mn. A country’s total exports consist of both domestic and foreign goods, with the foreign goods being referred to as re-exports. Re-exports involve the exportation of foreign goods in the same state as previously imported, while domestic exports represent goods produced within the country.
• The value of imports for January to August 2023 from Jamaica’s five main trading partners, the United States of America (USA), China, Brazil, Japan, and Colombia, was US$3,114.9Mn or 61.3% of total imports. This represents a 0.8% decline compared to the US$3,139.5Mn spent for the corresponding 2022 period due largely to lower imports of fuels from the USA.
• The top five destinations for Jamaica’s exports were the USA, Puerto Rico, Latvia, and the Russian Federation. Export revenues from these countries increased by 27.4% to US$977.0Mn.

(Source: STATIN)