• Grace Kennedy Limited recorded a net profit to shareholders of $7.03Bn for the financial year ending December 2022. This represents a 14.2% yoy decline. If adjusted for non‐recurring gains of $895Mn in 2021 and $170.5Mn in 2022, the decline in net profit for 2022 compared to 2021 would have been 7.7%.
• The decline occurred despite a 10.5% increase in revenues, due to higher costs. Direct and operating expenses amounted to $136.10Bn for the financial year 2022, which represents an 11.9% increase compared to last year. This was primarily due to rising distribution, input and interest costs, supply chain disruptions, and ongoing geopolitical tensions.
• GK’s food business recorded strong overall growth in revenues and an increase in PBT when compared FY 2021. However, the Financial Group recorded a decline in PBT despite an expansion in revenues.
• The stock price has decreased by 4.8% since the start of the calendar year. The stock closed Thursday’s trading session at $79.21 and currently trades at a P/E of 11.2x, which is above the Main Market Conglomerate Sector Average of 10.0x.
• GK also announced that it will launch a share buy-back this year, subject to the approval of its regulators. The proposed share buy‐back is being implemented because the share price is considered to be below its true value and is an opportunity to enhance shareholder value by helping to raise earnings per share.
• Rising inflation, an inconsistent supply chain, increasing interest rates and distribution costs, as well as geopolitical tension remain the main headwinds to GK’s performance in 2023.  Further, currency movements in key operating markets are also expected to factor into business performance for the company this year.

(Sources: JSE and NCBCM Research)

• International oil and gas explorer giant Woodside Energy found significant prospects for natural gas and potential for oil off Barbados’ coast in its assessment of offshore fossil fuel reserves.
• The announcement of the find was made by the Director of Natural Resources in the Ministry of Energy and Business Jamar White in an update to Parliament. The announcement was made during the parliamentary scrutiny of the 2023-2024 Estimates of Expenditure and Revenue, which continued on Monday (February 27).
• According to White, “they completed a 2,600-square kilometre 3D seismic survey offshore Barbados in an effort to better understand what the prospects were. From what we are hearing – and we are awaiting official notice from the company – the results look very encouraging.”
• Barbados has no major offshore discoveries, but for decades, has been producing about 1,600 barrels of oil daily from inland wells. Its neighbour Trinidad has been producing oil and gas—gas especially—in large quantities for more than 100 years.
• The country’s economic growth prospects would benefit greatly from natural gas production, transportation, and consumption. This development has the potential to provide significant employment and attract investments, while significantly reducing fuel costs and ultimately the cost of goods for consumers.

(Sources: Our Today and NCBCM Research)

• Peru's government announced the launch of more than 30 public-private projects worth nearly $9 billion, hoping to revive the economy hit by violent anti-government protests.
• The projects, involving road infrastructure, energy and sanitation, are set to begin between this year and 2024, according to the head of the state's agency for investment promotion Jose Salardi. "The key is to regain confidence," Salardi said, adding the government is simplifying processes, standardizing contracts and coordinating with the private sector.
• Anti-government protests have swept the country since former President Pedro Castillo was ousted on December 7, with clashes between protesters and security forces leaving dozens dead.
• Private investment in Peru fell 0.5% last year, in contrast to the 37.4% growth recorded in 2021, according to economy ministry data. Economic growth stood at 2.7% at the end of 2022, a steep decline from the 13.6% climb recorded the year before.
• The International Monetary Fund (IMF) recommended earlier in February that Peru implements "targeted, temporary" fiscal stimulus, given the slump in economic activity. The country aims to increase private investment by 3% this year, as early economic indicators show a recovery in February.

(Source: Reuters)

• The number of Americans filing new unemployment claims fell again last week, pointing to sustained labour market strength that could fuel further rate hikes from the Federal Reserve.
• Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 190,000 for the week ended Feb. 25, the Labour Department said on Thursday. It was the seventh straight week that claims remained below 200,000.
• There is still no sign that high-profile layoffs, mostly in the technology sector, have had a material impact on the labour market, with economists and policymakers saying these companies over-hired during the pandemic and were not representative of the overall economy. Economists also speculate that severance packages were keeping some laid-off workers from filing claims.
• The unemployment rate, at 3.4% in January, was the lowest in more than 53 years. Economists expect strong employment growth in February, though the pace probably slowed from January's blockbuster 517,000 jobs.
• Labour market resilience and stubbornly high inflation have increased the odds of the Fed raising interest rates at least three more times this year instead of twice. The U.S. central bank has hiked its policy rate by 450 basis points since last March from near zero to a 4.50%-4.75% range, with the bulk of the increases between May and December.

(Source: Reuters)

• Eurozone inflation fell less than expected last month and underlying price growth surged, reinforcing the case for the European Central Bank to keep raising interest rates at a brisk pace, data from Eurostat showed on Thursday.
• Consumer price inflation in the 20 countries sharing the euro currency eased to 8.5% in February from 8.6% a month earlier as a big fall in energy costs offset a price surge in nearly all other areas, but still came in above expectations for 8.2% in a Reuters poll of economists.
• Investors now see the ECB's 2.5% deposit rate rising by a combined 100 basis points in March and May, then to around 4.1% at the turn of the year, with markets having priced in an extra 50 basis points of hikes in the past month alone.
• Bundesbank President, Joachim Nagel, has already argued that the recent fall in energy prices only lowers short-term inflation and does not improve medium-term prospects, so the ECB may need to opt for another large rate hike in May.
• However, ECB’s chief Christine Lagarde argued that disinflation will pick up speed from next month as surging gas prices at the onset of Russia's war in Ukraine get knocked out of base figures.

(Source: Reuters)

• The Fourth Supplementary Estimates for the fiscal year 2022/23 were approved in the House of Representatives on Tuesday (Feb. 28), pushing budgeted expenditure to approximately $1.002 trillion.
• Included are net incremental adjustments to the Central Government Budget of $4.3 billion, reflecting a net increase of $10.1 billion in recurrent expenditure and a net reduction of $5.8 billion in capital spending. The additional expenditure is primarily to facilitate payments under the public sector compensation restructuring exercise for the remaining groups that were not covered under the Second and Third Supplementary Estimates.
• There are also additional sums for the National Solid Waste Management Authority and the Jamaica Urban Transit Company (JUTC).
• The Fourth Supplementary Estimates were approved with one amendment. Finance Minister, Dr. Clake highlighted that the House has acted in good faith by tabling a Fourth Supplementary estimate and getting it passed in the same day in order for those payments to be made in this fiscal year.

(Source: JIS)

• Just over $1.1 billion has been allocated to continue the implementation of the Boosting Innovation, Growth and Entrepreneurship Ecosystems (BIGEE) project. The project aims to promote sustainable and robust growth among startups and MSMEs in Jamaica.
• There have been several physical achievements up to December 2022. This included the launch of an Innovation grant fund for medium-sized firms, the approval of five MSMEs to receive support from the Patent Grant Fund, and the support of four technology transfer offices with commercialised technology from universities, research institutions and investors. Other achievements included the design of a Venture Capital Fund and the launch and capitalisation of the Angel Fund.
• The targets for 2023/24 include various training programmes and the installation of systems and equipment to facilitate effective data capture and project management.
• The programme is being implemented by the Development Bank of Jamaica with co-funding from the European Union and the Inter-American Development Bank. Some $550 million has been estimated for the fiscal year 2024/25.
• These initiatives geared towards providing more funding for MSMEs will aid in business expansion activities, which will ultimately aid economic growth. According to the Ministry of Industry, Investment and Commerce, the MSME sector accounts for about 80% of jobs in the Jamaican economy and contributes significantly to GDP, employment, poverty alleviation, and social stability. Additionally, these institutions make up over 97% of the island’s tax-paying businesses, which bodes well for contribution to the government’s coffers.

(Sources: JIS and NCBCM Research)

• Brazil's gross debt continued its downward trajectory in January, while the consolidated public sector recorded a strong primary surplus, the central bank showed on Tuesday.
• The government debt as a percentage of gross domestic product fell to 73.1% in January, from 73.4% in December, the lowest level since June 2017, when it reached 72.7%. The reduction was mainly due to the growth of nominal GDP, followed by net debt redemptions, which are affected by positive budget balance figures.
• In January, the Brazilian public sector recorded a primary surplus of 99 billion reais (US$19Mn), surpassing the 90 billion reais surplus expected by economists polled by Reuters. However, the figure was lower than the 101.8 billion reais surplus in the same month last year. The performance was mainly driven by the 79.4 billion reais surplus from the central government, helped by record revenues for the month.

• Despite the positive data, the anticipated outturn for 2022 may show a strong primary deficit, worsened after leftist President Luiz Inacio Lula da Silva secured Congress approval for a multi-billion reais spending package to fulfil campaign promises.
• However, the government has signalled that it will seek to reduce the fiscal shortfall, through the reimposition of taxes on fuels announced by the Finance Ministry on Monday.

(Source: Reuters)

• Markets in the Americas face high political risks due to public dissatisfaction with incumbent governments, which will continue to manifest in persistent protests (such as in Peru) and the inability to pass reforms (as in Ecuador).
• As a result of these risks, in February 2023, Fitch made three further downward changes to its Short-Term Political Risk Index (STPRI) and six upward changes to the index (a lower score implies higher risk).
• Fitch has increased the STPRI score (specifically its social stability component) in five small markets in the Americas - namely Barbados, Bahamas, the Dominican Republic, Panama and Puerto Rico - where it expects a degree of economic recovery will lower the risk of public unrest. Risks in Guatemala have also decreased, given that an established candidate is expected to prevail in the 2023 elections after two outsider challengers were barred from the campaign. This is likely to lead to a degree of policy continuity for the country.
• However, the political risk in Peru, Ecuador, and Cuba has increased due to ongoing anti-government protests, rising gang violence, and expected social unrest increasing slightly due primarily to elevated inflation. Political risks for both Mexico and Brazil remain stable.
• Overall, the GDP-weighted average STPRI score in Latin America and the Caribbean rose slightly from 55.6 to 55.9 out of 100, implying a modest easing of political risks. For Caribbean nations in particular, political risk is expected to ease due to the expected economic rebound and other, more idiosyncratic factors.

(Source: Fitch Solutions)

• China’s factory activity for February bounced further into expansion territory, according to data from the National Bureau of Statistics. The official manufacturing purchasing managers’ index rose to 52.6 in February – above the 50-point mark that separates growth from contraction. That marks the highest reading since April 2012, when it hit 53.5.
• The government said February’s reading showed continued improvement in the climate for production and business, noting that the total volume of activity “significantly increased” as well.
• “The broad-based obvious improvements for both Manufacturing and non-Manufacturing PMIs in February reflect the solid momentum of post-reopening recovery,” economists at Citi said in a note. Citi economists added that while expectations for stimulus policies are low, the People’s Bank of China would be “mindful of inflation risks and may tilt to a natural policy once the economy is back on track.”
• Shortly after China’s factory activity data was released, Moody’s announced that it expects China’s economy to grow by 5% for 2023, an upgrade from its previous outlook of 4% growth, while noting growth will likely decline over the medium term.

(Source: CNBC)