• The Cayman Islands remains on the Financial Action Task Force’s (FATF) grey list of 23 countries or jurisdictions that are subject to increased monitoring by the global anti-money laundering and terrorist financing watchdog.
• Just two countries – Pakistan and Nicaragua – were removed from the grey list following the FATF plenary in Paris, France, which was concluded on Friday, October 21st.
• The FATF placed Cayman on the grey list in February 2021, citing as reasons for the move a lack of fines and enforcement actions by Cayman’s regulatory bodies. This automatically led to Cayman also being placed on the European Union grey list in February this year.
• The FATF said, since it was placed on the list, Cayman had made a “high-level political commitment” to work with the FATF and the Caribbean FATF to strengthen its anti-money laundering and counter-terrorism regime and had imposed “adequate and effective sanctions in cases where relevant parties (including legal persons) do not file accurate, adequate and up-to-date beneficial ownership information in line with those requirements”.
• Cayman’s Finance Chief Executive Steve McIntosh explains that “this represents significant progress towards the jurisdiction’s removal from the FATF “grey list” and demonstrates the country’s commitment to meeting the highest global standards for transparency, information sharing and the combatting of international financial crime”. Consequently, he remains optimistic that the ongoing efforts by authorities to investigate and prosecute money laundering offences in the jurisdiction will lead to its removal from the grey list in due course.

(Source: Cayman Compass)

• Rishi Sunak will become Britain's first prime minister of colour on Tuesday after he won the race to lead the Conservative Party, tasked with steering a deeply divided country through an economic downturn set to leave millions of people poorer.
• One of the wealthiest politicians in Westminster, Sunak, 42, will become the country's youngest leader in modern times - and it's third in less than two months - as he takes over during one of the most turbulent eras in British political history. He replaces Liz Truss, who only lasted 44 days before she said she would resign, needing to restore stability to a country reeling from years of political and economic turmoil and seeking to lead a party that has fractured along ideological lines.
• The multi-millionaire former hedge fund boss will be expected to make deep spending cuts to try to rebuild Britain's fiscal reputation, just as the country slides into one of the toughest downturns in decades, hit by the surging cost of energy and food.
• Sunak, who will be appointed prime minister by King Charles on Tuesday, will also have to work hard to hold Britain's dominant political party together after some accused him of treachery earlier this year when he resigned from the cabinet of former leader Boris Johnson, triggering his downfall too. Other Conservatives say he is too rich to understand the day-to-day economic pressures building in Britain and worry whether he could ever win an election for a party that has been in power for 12 years.
• Britain has been locked in a state of perma-crisis ever since it voted in 2016 to leave the European Union, unleashing a battle at Westminster over the future of the country that remains unresolved to this day.

(Source: Reuters)

• One thing’s clear at the start of the corporate earnings season: Inflation is still a hot topic for companies.
• About two-thirds of companies in the S&P 500 that reported earnings in the first two weeks of the season (Oct. 10-21) had representatives mention inflation, according to a conference call transcript search run on FactSet. Among those companies are PepsiCo, Citigroup and Abbott Laboratories.
• “The environment clearly is still inflation-ridden with a lot of supply chain challenges across the industry,” said Ramon Laguarta, chief executive of PepsiCo. The snack and drink maker beat analyst expectations for both revenue and earnings per share as its price hikes buoyed its bottom line, even as some units saw volume declines.
• Recent economic data shows little sign of inflation letting up. The consumer price index increased 0.4% in September, which was a hotter reading than the 0.3% expected by Dow Jones, according to the Bureau of Labour Statistics. It was at 0.6% without food and energy factored in, which was also above Dow Jones’ estimate of 0.4%. The producer price index, which gauges wholesale prices, also rose 0.4% in September. That was similarly above the Dow Jones expectation of 0.2%.

(Source: CNBC)

• Supreme Ventures Limited (SVL) reported a net profit attributed to owners of the parent company of $2.04Bn for its nine months ended September 30, 2022, which represents a 34.3% or $520.97 increase relative to the prior period.
• This was supported by an 18.3% increase in gaming income. All three of its main gaming segments, lotteries, sports betting and Pin codes, saw revenue increases of 21%, 146% and 8% respectively.
• The Group continues to focus on improving its business segments as well as launching products through its retail channel. Management has also highlighted that it continues to build out its business in Guyana and add improvements to its horse racing product through technological and new product initiatives.
• Going forward, management expects to see further growth fueled by new games and initiatives along with the continued expansion in the mobile and online gaming space. SVL’s stock price has increased by 53.78% since the start of the calendar year. The stock closed Thursday’s trading session at $27.36 and currently trades at a P/E of 25.7x.

(Sources: Company Financials and NCBCM Research)

• Barbados’ current account deficit is forecasted to narrow to 6.6% of GDP in 2022 and 6.9% in 2023, from 11.2% in 2021. This is a negative revision from the previous 3.4% forecast, due to recent government data revisions.
• It is still expected that the recovering tourism sector will support a sharp rebound in services exports, though sustained demand for goods imports will keep the overall current account in deficit. Consequently, the deficit is expected to average 6.8% of GDP from 2022-2026, slightly larger than the historical average of 4.1% from 2015-2019.
• The services trade surplus is expected to widen to US$1.0Bn in 2022, from US$769.0Mn in 2021. The slow but continued recovery of the tourism sector will underpin the wider services trade surplus in 2022. Compared to tourist arrivals in 2019, arrivals peaked in March 2022 at 64% of 2019 levels, but have come down slightly in subsequent months.
• Remittance inflows have hit records in 2022 across most Caribbean countries, due to the strength of the US labour market and Fitch expects inflows to Barbados will remain high through 2022. So far through Q2 2022, incoming transfers have increased by 33.0% from the same period in 2021, which is further anticipated to widen the secondary income surplus to US$76.0Mn, from US$33.1Mn in 2021. 
• Fitch’s global team is currently forecasting a worldwide slowdown which will impact growth in the US and other developed markets that are a major source of Barbadian tourist arrivals and remittances. That said, falling commodity prices will bring import growth down to 9.0%, compared to 17.0% in 2022, limiting the overall size of the current account deficit.

(Source: Fitch Solutions)

• Fitch Ratings on Thursday revised Peru's outlook to negative from stable, saying a deterioration in political stability and government effectiveness has increased downside risks to the country's ratings.
• The rating agency said it expects the weakening of Peru's political governance institutions will be difficult to reverse before the end of 2024, adding that "weaker governance poses greater downside risks to investment and economic growth" than the agency had expected earlier this year.
• Peru's 'BBB' ratings are supported by its moderate public debt, net external creditor position, and track record of solid macroeconomic policy and fiscal frameworks. Rating constraints include lower governance, income per capita, and social indicators than the 'BBB' median, high commodity export dependence, and the low government revenue base.
• Further deterioration of political conditions or governance indicators that undermine the political and economic framework; sustained economic growth underperformance relative to historical levels or weakening of the policy framework; sustained increase in general government debt/GDP could all lead to negative rating action.
• On the other hand, higher economic growth performance and prospects; easing political gridlock and uncertainty that improves governability; and maintenance of prudent fiscal policy settings that lead to a durable stabilization of government debt/GDP ratio are all factors that could lead to better ratings.

(Source: Fitch Solutions)

• President Joe Biden's Inflation Reduction Act (IRA) is set to kickstart a new era of wind and solar growth after global economic headwinds slowed progress in recent years.
• The IRA extends tax credits for wind and solar for the next ten years and allows stand-alone energy storage projects to qualify for the first time. The bill also includes tax credits for the manufacturing of wind and solar components.
• The act could lead to an additional $160 billion of investments in onshore wind, doubling installed capacity over the next decade to 280 GW, compared with an earlier growth forecast of 38%, Rystad Energy consultancy said.

(Source: Reuters

• Canadian home prices tumbled in September from August, posting the largest monthly decline since the index was launched in 1999, while year-over-year price gains continued to slow, Teranet–National Bank National Composite House Price data showed on Thursday.
• The index, which tracks repeat sales of single-family homes in major Canadian markets, showed prices dropped a record 3.1% in September from August, led by sharp declines in Toronto and Hamilton, Ontario.
• The major market index is now 7.0% below the May peak, with Hamilton down 13.5% and Toronto down 11.1%. Calgary and Edmonton, Alberta, by contrast, both hit fresh index highs in August.
• Prices are still higher than a year ago, up 6.0% from September 2021, but gains are slowing. The Teranet index tracks closings, so it typically lags realtor sales data by three to five months.

(Source: Reuters)

• For the period January to June 2022, Jamaica’s total spending on imports was valued at US$3,758.2Mn, an increase of 37.4% relative to the prior period. These higher imports were driven by the reopening of the economy, higher levels of employment driving demand for goods as well as higher inflation.
• This was mostly attributed to higher imports of “Fuels and Lubricants”, “Raw Materials/Intermediate Goods” and “Consumer Goods”, which rose by 70.7%, 28.5% and 33.8%, respectively.
• Earnings from exports amounted to US$801.0Mn which represents a 2.3% increase to the prior period. This was due primarily to a 56.6% increase in the value of exports of Mineral Fuels.
• Earnings from domestic exports accounted for 82.3% of total exports from January to June 2022, a fall of 3.3% when compared to the similar period of 2021. This was due to a 55.2% reduction in exports from the Mining and Quarrying industry as alumina exports fell by 65.5% to US$78.5 million as the Jamaclo plant was closed during the period.
• The value of imports for the period January to June 2022 from Jamaica’s five main trading partners, the United States of America (USA), Brazil, China, Trinidad and Tobago and Japan, increased by 45.0% to US$2,472.7 million. This increase was due largely to higher imports of fuel from the USA and Trinidad and Tobago likely influenced by elevated energy prices and greater local economic activity spurring demand.
• The top five destinations for Jamaica’s exports were the USA, Puerto Rico, Canada, the Russian Federation and the United Kingdom. The value of exports to these countries increased by 30.6% to US$654.3 million due mainly to higher exports of fuels to the USA.

(Source: STATIN)

• Fitch Solutions has revised its end-2022 interest rate forecast for Costa Rica to 9.25%, from 8.50% previously, as the Banco Central de Costa Rica (BCCR) has hiked its benchmark rate more aggressively than anticipated to 8.50% in September up from the 7.50% in July.
• The bank is expected to continue its hiking cycle at its final two meetings of the year, albeit at a slower pace, increasing the rate by 50bps on October 26 and 25bps on December 14, bringing the rate to 9.25% by end-2022, before pausing. Importantly, inflation slowed markedly in September to 10.4% y-o-y, from 12.1% in August, largely due to softer increases in food and fuel prices.
• The deceleration in inflation in September was mirrored by a decline in inflation expectations, with 12-month ahead inflation expectations in the BCCR’s survey slipping from 9.9% in August to 7.9% in September, while 24-month ahead expectations fell from 8.5% to 6.1%.
• Inflation is expected to gradually cool in 2023, averaging 6.3% and reaching 4.8% by the end of the year, due to base effects, improving supply chains, a moderation in commodity prices and the BCCR’s rate hikes. However, it will remain elevated compared to the historical inflation average of 1.3% from 2015-2021, and above the BCCR’s 2.0%-4.0% target range.
• Fitch expects that the BCCR will likely begin to lower the rate in H2 2023, to support economic growth as inflation and expectations moderate further, though inflation will not come down fast enough to allow for more aggressive rate cuts.
• Risks to Fitch’s view remain to the upside in the remainder of 2022, but in 2023 the risk is that the bank cuts more aggressively than forecast if Costa Rican growth drops sharply.

(Source: Fitch Solutions)