• A Cabinet minister yesterday conceded that Bahamians are becoming increasingly “alarmed” over the $10Bn-plus national debt and “systematic” action is needed to address it.
• Michael Halkitis, Minister of Economic Affairs, told the Senate in leading-off debate on the Speech from the Throne that the newly-elected Davis administration is “setting the foundation for sweeping fiscal reform”.
• Placing much emphasis on committees, namely the newly-established Debt Advisory Committee and Revenue Policy Committee, he indicated plans to change the fiscal culture within government, while acknowledging growing concern that the weak public finances could drag down the wider economy and entire country if not addressed.
• “Many Bahamians are alarmed by the level of our national debt,” Mr Halkitis said. “It’s something that must be addressed in a systematic manner and we are going about that.” Tribune Business revealed earlier this year that the $10.356bn national debt at end-June 2021 was larger than the size of the Bahamian economy, producing a 100.4% debt-to-GDP ratio.

(Source: The Tribune)

• Inflation across a broad swath of products that consumers buy every day was even worse than expected in October, hitting its highest point in more than 30 years, the Labour Department reported Wednesday. 
• The consumer price index, which is a basket of products ranging from gasoline and health care to groceries and rents, rose 6.2% from a year ago, the most since December 1990. On a monthly basis, the CPI increased 0.9% against the 0.6% estimate. 
• The data comes as policymakers such as Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen maintain that the current price pressures are temporary and related to Covid pandemic-specific issues. While they have conceded that inflation has been more persistent than they expected, they see conditions returning to normal over the next year or so. 
• Escalating inflation could cause the Fed to tighten policy more quickly than it has signaled. The central bank has indicated that it will within the next few weeks start reducing the amount of bonds it buys each month, though officials have indicated that interest rate hikes are still off into the future.

(Source: CNBC)

• China launched a sale of euro-denominated sovereign bonds on Wednesday aimed at raising 4 billion euros ($4.62 billion), three weeks after the country raised $4 billion via a U.S. dollar bond sale that drew robust demand. 
• China's Ministry of Finance is issuing the euro bond in three, seven, and twelve year tranches, according to a term sheet seen by Reuters on Wednesday. The Ministry said on Oct. 29 it will issue the debt in Hong Kong to raise 4 billion euros. 
• Beijing has been issuing sovereign bonds offshore regularly, in a bid to integrate China more closely into the global financial system, and build a price benchmark for overseas issuance of Chinese corporate bonds. It conducted similar euro bond sales last year and in 2019, when Beijing sold its first euro-denominated government debt in 15 years. 
• The euro bond sale comes as China's economy is slowing amid a power crunch and surging raw material prices, while China's dollar bond market has tumbled due to fears of contagion from China Evergrande Group's debt problems.

(Source: Reuters)

• As at the end of October 2021, Net International Reserves (NIR) stood at US$3,868.07Mn, a 4% (US$96.15Mn) decrease relative to September 2021.
• A 2.0% (or US$94.47Mn) decrease in total foreign assets and a 0.2% increase in foreign liabilities were behind the reduction.
• The NIR for October translated to 45.70 weeks of goods imports, which is lower than the 46.62 weeks reported at the end of September. It also translated to 32.62 weeks of goods & services imports at the end of October (33.27 weeks: September 2021). The drop in NIR and the slight decline in import coverage could likely be influenced by a rise in the estimated cost of imports as energy prices, input and freight costs have been rising.
• At the current level, Jamaica’s NIR remains well-above the international benchmark of 12-weeks of imports.

(Sources: Bank of Jamaica & NCBCM Research)

• Effective Tuesday, November 9, 2021, Jamaica began the administration of Pfizer first dose to children 12 years and older.
• The rollout will take place predominantly in schools and will help to facilitate the re-commencement of face-to-face learning in schools on a wider scale. The reopening will benefit numerous listed companies across the transportation, manufacturing and distribution sectors.
• Transjamaica Highway for instance should see an increase in motorist activity following the re-opening of schools as parents transport their kids to school. This should bolster the improvement in profitability witnessed thus far this financial year as revenues are currently up 15% for the nine-months ended September 2021, and the net loss of US$3.8Mn reported for the same period in 2020 has been transformed into a net profit of US$1.8Mn for the current year.
• Manufacturers and Distributors such as LASM, Wisynco, Purity and others should also realise an expansion in sales revenues and net profit as the demand from schools for snacks and beverages comes back on stream.

(Sources: JIS News & NCBCM Research)

• Production within Guyana’s manufacturing sector remained positive throughout the first half of 2021, with output increasing 13.1%, according to the Bank of Guyana.
• Based on statistics from the Central Bank’s mid-year report, this performance is a significant improvement, considering that the sector contracted by 0.2% at the end of the corresponding period last year.
• According to the central bank “This outturn reflected a 23.1 per cent rise in output of ‘other’ manufacturing, and 3.1 per cent increase in rice manufacturing, which together offset the decline of 17.2 per cent in the value-added of sugar.”
• “Other manufacturing industries registered increases in the categories of alcoholic beverages by 48.0 per cent; paints by 34.3 per cent; Malta by 20.3 per cent; liquid pharmaceuticals by 10.4 per cent; nonalcoholic beverages by 9.4 per cent; and electricity by 3.8 per cent, as economic activity thrived due to the reopening of the economy,” the Bank related.
• The improvement in the manufacturing sector will support the country’s projected 21.1% growth rate. After expanding by 43.5% in 2020, Guyana will be a regional and global growth outperformer in 2021 and 2022 as well. While this growth in manufacturing will influence the 2021 expansion, surging oil production and inbound investment will be the main drivers of growth. Easing COVID-19 restrictions and government stimulus will also aid commercial activity in the short-to-medium term.

(Sources: Guyana Chronicle & NCBCM Research)

• Fitch Solutions forecasts the Banco Central de Costa Rica (BCCR) will maintain its policy interest rate at 0.75% in 2021 and then hike by 50 basis points (bps), to 1.25%, in 2022 as global monetary policy tightens and unemployment falls closer to pre-pandemic levels.
• As the US Federal Reserve (Fed) begins to raise interest rates in 2022 and 2023, it will prompt the BCCR to also hike rates to maintain a competitive real interest rate differential.
• Costa Rican inflation will rise to 2.4% y-o-y by end-2021, from 1.0% at the start of the year, and average 2.9% in 2022, as rising oil prices drive up transport prices in the coming quarters. The projected rise in inflation is within the BCCR’s target range of 2.0% to 4.0%.

(Source: Fitch Solutions)

• Private equity dealmakers are descending on Berlin for their annual get-together, with their industry thriving and many of them wondering how long the good times will last.
• Armed with billions of dollars, buyout firms have already taken advantage of what has been a record year for mergers and acquisitions (M&A), selling some of their assets for top dollar.
• Private equity-backed M&A deals more than doubled to a record $818.4 billion in the first nine months of this year, up from $315.2 billion last year, according to Refinitiv.
• The S&P private equity index, meanwhile, is up 43% so far this year, compared with a 25% gain in the benchmark S&P 500. In addition, the private equity industry's median internal rate of return was 33% as of March 2021, the highest on record, according to data provider Pitchbook.
• Given the global trend, there exist opportunities locally for private investing, both from the fund and investor perspectives. There are opportunities for PE investors to acquire stakes in companies in growth sectors such as E-commerce, Information Technology, and Business Process Outsourcing, as well as in depressed sectors such as Entertainment and Tourism.
• Consequently, investors with a higher risk appetite looking to diversify their portfolio holdings may find value from private equity funds relative to traditional equity investments. Though private equity has its risks, as an investment asset it has the potential to provide strong returns, offer diversification, and could improve the resilience of investment portfolios.

(Sources: Reuters & NCBCM Research)

• Prices paid to U.S. producers accelerated in October, largely due to higher goods costs, fueling concerns about the persistence of inflationary pressures in the economy. 
• The producer price index for final demand increased 0.6% from the prior month and 8.6% from a year earlier, matching forecasts, Labour Department data showed Tuesday. Excluding the volatile food and energy components, the so-called core PPI rose 0.4% and was up 6.8% from a year ago.
• The report underscores how transportation bottlenecks, materials shortages and increasing labour costs have sent prices soaring across the economy in recent months. And with ongoing supply-chain challenges anticipated to linger into 2022, sustained price increases at the producer level presage additional consumer price increases in the coming months.

(Source: Bloomberg)

• The Bank of Jamaica’s Financial Policy Committee indicated that, notwithstanding the on-going effects of the COVID-19 pandemic, the Jamaican economy showed signs of improvement during the June and September 2021 quarters. In this context, the performance of the financial system improved during the review period. The financial system continued to be well-capitalised and reflected improvements in liquidity and profitability. This observation was made in the Committee’s review of the financial system’s performance and risks. 
• Credit growth during the June and the September 2021 quarters was generally muted. The financial system also did not demonstrate any significant change in institutions’ exposure to selected sectors. The sector continued to report good asset quality even as the stock of loans under moratoria provided by banks continued to fall as payment accommodations expired. Financial institutions remained largely resilient to simulated financial shocks and there were no notable changes in contagion risks. 
• Uncertainties remain about the duration of the COVID-19 pandemic and its impact on households and businesses. Consequently, the supervisors of the financial system will continue their enhanced monitoring to ensure that the system remains sound.

(Source: BOJ)