• Mexico’s President Andres Manuel Lopez Obrador said on Thursday he’ll seek central bank approval to use $12 billion in International Monetary Fund reserves to pay down debt, as he presses ahead with austerity. 
• Lopez Obrador thanked bank Governor Alejandro Diaz de Leon for being open to the idea of using the windfall, which is being transferred to the monetary authority from the IMF, to prepay liabilities. He declined to comment on Diaz de Leon’s prior remarks that the government must purchase the reserves from the bank. 
• AMLO, as the president is known, has made austerity a cornerstone of his administration and has vowed not to raise debt levels. His plan to use the IMF funds was proposed by his new finance minister and long-time confidant, Rogelio Ramirez de la O, who is leading the project.
• “The money shouldn’t just be stored away,” AMLO said. “That would be a loss, because it earns very little interest, while the government has to pay high interest on its debt.” 
• He added that the decision will depend on the central bank, known as Banxico, whose autonomy his government will “always respect, always.”

(Source: Yahoo Finance)

• Fitch Solutions forecasts that Argentina will post a current account deficit of 0.7% of GDP in 2021 and 1.5% in 2022 (from a surplus of 0.9% in 2020), narrow shortfalls relative to recent years as multi-year high soybean prices support export earnings. 
• The country posted a rare current account surplus (0.9% of GDP) in 2020, as a deep recession curtailed imports, while exports fell less significantly. Though Argentina's economic recovery remains highly volatile and incomplete, domestic activity has nonetheless bottomed out and with it import demand is rapidly rebounding, pulling the overall balance back into deficit. 
• Although Argentina's external financing needs will be modest over the coming quarters, the country is likely to see limited foreign investment given a lack of confidence in policy direction. 
• As a result, Fitch anticipates that the stability of Argentina's external accounts over the coming quarters will depend on the maintenance of capital controls and an eventual agreement to delay repayments to the IMF.

(Source: Fitch Solutions)

• As the base effects from last year’s contraction fade, the latest signs suggest that emerging market (EM) economies lost momentum in mid-2021. Fitch expects that economic growth will ease over the remainder of the year. 
• Only a few EMs have published Q221 GDP figures, but below-consensus outturns in both the US and China strengthened Fitch’s view that the global economy started to lose momentum in late Q2. Growth in China slowed from 18.3% to 7.9% y-o-y in Q221, which was below the Bloomberg consensus estimate of 8.1%. In the US, consensus expectations that growth would accelerate from 6.4% q-o-q (annualized) to 8.5% were dashed, with growth remaining pretty stable at 6.5% in Q221. 
• While Fitch expects that growth in the world’s two largest economies will remain rapid by recent standards, both are now past the peak of their recoveries. This will weaken a key tailwind that has boosted EM economies in recent quarters. 
• Indeed, the latest figures show that EM export growth slowed in May. Argentina and Colombia were the only two major EMs where export earnings rose faster in US dollar terms than they had in April. Evidence from Turkey, Brazil, Argentina, Chile, China and Vietnam suggests that export growth slowed further in June.

(Source: Fitch Solutions)

• Oil prices skidded on Thursday for a sixth session, hitting lows not seen since May, as investors pulled back over concerns about weakened global demand as COVID-19 cases climb and on the back of a rise in the U.S. dollar. 
• The oil market rallied throughout the first half of 2021, but has lost about 15% since early July. The recent wave of coronavirus infections worldwide has sapped global travel and threatens economic activity, just as major oil producers are getting ready to increase supply. 
• "There's concern that the Fed will begin tapering, resulting in a stronger dollar and weaker crude prices," said Andrew Lipow, president of Lipow Oil Associates in Houston. 
• The International Energy Agency last week trimmed its oil demand outlook due to the spread of the Delta variant. OPEC, however, left its demand forecasts unchanged.

(Source: Reuters)

• Strong revenue growth supported a 75.7% year over year increase in Jamaica Producers Group Limited’s net profit attributable to shareholders to $609.58Mn (EPS: $0.54) for the 26 weeks ending July 3, 2021.
• Revenue which grew by 19.8%($1.89Bn) outweighed the increase in cost of sales (19.3% or $1.31Bn), rise in selling and admin expenses (9.0% or $160.00Mn) and higher tax expenses (47.8% or $103.22Mn). 
• Both of the company’s business segments – Logistics & Infrastructure (“L&I”) and Food & Drink (“F&D”) generated improved second quarter and year- to-date revenues and profits relative to 2020. The L&I division benefitted from the spike in overall demand for international shipping as the global economy recovers, and from the growing volumes of bulk and breakbulk cargo and automotive shipments to Jamaica and the region.
• The F&D Division benefitted from strong supermarket sales and improved consumer confidence arising from wage and GDP growth and advancing vaccination programmes in the US and European markets. This offset weak revenues from the company’s tropical foods business in Jamaica (due to school closures and curfews) and travel retail across the Caribbean.
• While inflation, supply chain shocks and economic uncertainty related to the uneven management of the COVID-19 pandemic will continue to present general challenges in the short term, the Group has decided to maintain an aggressive investment programme. With shareholders’ equity of $16.9Bn and net cash and investments of $10.1Bn, the JP Group believes it has the balance sheet strength to support its strategy.
• JPG’s stock price has appreciated by 5.0% since the start of the year and closed Tuesday’s trading session at a price of $22.0 per share. At this price, the stock trades at a P/E ratio of 10.2x earnings which is below the Main Market Sector average of 16.4x.

Source: (JPG Financials)

• iCreate Ltd’s net profit for the 6-months ending June 2021 grew by 43.8% year over year to $4.44Mn on the back of growth in other income and a decline in expenses.
• Other income improved to $5.40Mn from $30K the same period last year, while admin and general expenses fell by 34.4% (or $7.16Mn). The earnings growth was also supported by a decline in finance costs and cost of sales by 25.3% and 37.5% respectively.
• The performance was however tempered by a 39.2% drop in revenue due to the non-resumption of programs such as its Creative Training Certification which depends on practical and hands on training.
• As revenues remain below pre-pandemic levels, the company has announced several initiatives to pivot and grow. These include the addition of a new business division, iCreate Agency, which will serve as a production agency that will focus on video production, Reggae Sunsplash and other multi-media production-related activities. It also acquired an e-commerce company Mobile Edge, and entered into the commercial real estate segment through its subsidiary Creative City Subsidiary. If the company is able to generate revenues efficiently from these new activities and businesses, it could realize greater and consistent profitability in the future.
• iCreate’s stock price has appreciated by 47.8% since the start of the year and closed Tuesday’s trading session at a price of $0.87 per share.

(Source: iCreate Financials & NCBCM Research)

• Panamanian President Laurentino ‘Nito’ Cortizo will accelerate public investment in infrastructure and the COVID-19 recovery in the coming quarters, sidelining his previous pledge to advance fiscal consolidation measures.
• During his annual address to the country in July, Cortizo announced that his government would advance a US$12.0Bn public investment programme and a US$1.5Bn public private partnership (PPP) scheme to accelerate the country’s recovery from the pandemic.
• Fitch Solutions gave Panama a score of 60.0 out of 100 in its Short-Term Political Risk Index, tied for second among 17 markets in Latin America, due to the country’s favourable policymaking environment and business-friendly framework.
• While Cortizo’s embrace of expansionary fiscal measures and the country’s robust national vaccination programme will help bolster short-term stability, his longer-term plan to narrow the deficit and the potential for constitutional changes highlight key challenges once the economic impact of COVID-19 subsides.

(Source: Fitch Solutions)

• Tourism stayover arrivals in Antigua and Barbuda for the month of July have surpassed pre-covid levels, as pent-up demand for travel, has tourists flocking to the twin-island paradise during the country’s traditional low season.
• The Ministry of Tourism has announced that stayover tourism arrivals for the month came in at a high with 23,405 tourists visiting Antigua and Barbuda via the V.C. Bird International Airport. The July 2021 air arrival figures have surpassed 2019 arrivals, which during the record-breaking year for Antigua and Barbuda, stood at 23,031.
• Minister of Tourism, The Honourable Charles Fernandez said, “there has been a visible change in the travel behaviour of our visitors brought on by the COVID-19 pandemic and we continue to see a steady increase in arrivals during the summer months”.
• “July has been an extremely strong month with demand for the destination from the US Market as well as the UK market, booming, with growth above 2019 figures. We are also beginning to see an uptake from our Caribbean and Canadian market.”

(Source: The Daily Observer)

• Shoppers in the U.S. cut back their purchases in July even more than expected as worries over the delta variant of Covid-19 dampened activity and government stimulus dried up.
• Retail sales for the month fell 1.1%, worse than the Dow Jones estimate of a 0.3% decline and below the upwardly revised 0.7% increase in June.
• Excluding automobiles, sales declined 0.4%, according to Commerce Department figures released Tuesday.
• “Although retail sales fell in July, the outlook for consumer spending remains positive,” said Gus Faucher, chief U.S. economist at PNC. “However, spending growth will shift from goods to services over the next couple of years, limiting growth in most categories of retail sales.”

(Source: CNBC News)

• Despite still-robust incoming data, Fitch Solutions believes that downside pressures are building, which pose risks to their full-year growth forecast of 8.5% for China. They see risks stemming from three key areas.
• First, the recent outbreaks in China have resulted in greater restrictions, and given the lower efficacy of the Chinese vaccines, China’s zero-tolerance approach could result in stricter lockdowns over the coming weeks, which could dampen consumption.
• Second, the recent crackdown by Beijing on tech, education and gaming companies have resulted in a sharp decline in stock markets, which will weigh on investor confidence.
• Third, questions around debt sustainability for certain Chinese companies have emerged given rising bond delinquencies, which have continued to rise and could also put downward pressure on investor sentiment.

(Source: Fitch Solutions)