• China hailed on Thursday the resumption of "normal discussions" with the United States on the trade and economic fronts, apparently keen to move beyond a trade war as it said both sides aimed to resolve issues pragmatically. 
• China's Vice Premier Liu He, who has led trade negotiations with the United States, has held two video calls with U.S. Trade Representative Katherine Tai and Treasury Secretary Janet Yellen in a week, marking the first formal engagement between the two sides on trade and economic issues under the Biden administration. 
• Both calls lasted about 50 minutes, commerce ministry spokesman Gao Feng told a regular news conference, adding that conversations started smoothly and Sino-U.S. trade, macro-economic situations and domestic policies were among the topics. 
• The discussions aimed at solving various issues come after a period of strained relations between the world's two biggest economies, including a nearly two-year tit-for-tat trade war.

(Source: Reuters)

• The International Monetary Fund delivered slightly improved growth forecasts on Thursday for Italy's economy in 2021 and 2022 as it gradually recovers from the coronavirus crisis with support from increased fiscal spending. 
• The IMF now sees Italy's gross domestic product up 4.3% and 4% in 2021 and 2022 respectively, revised up from an April estimate of 4.2% and 3.6%, and closer to the government's projections of growth of 4.5% this year and 4.8% next year. 
• "A robust recovery is expected in 2021 supported by ongoing vaccinations although large uncertainty remains," the Fund said in statement released at the end of its annual visit to Italy. "Continued policy support will be necessary until the recovery takes hold", IMF added. 
• Italy's economy grew by 0.1% in the first quarter this year from the previous three months due to higher investments and inventories, national statistics bureau ISTAT said on Tuesday, sharply raising a preliminary estimate for a 0.4% contraction. 
• The Fund said Italy's budget deficit for 2021 was now seen at 11.8% of GDP, up from 8.8% projected in April, and in line with a government's estimate for a double-digit deficit, which was last experienced in the early 1990s. As the coronavirus crisis pushes up government spending, the Fund also revised up the fiscal gap for 2022 to 6% from 5.5% of GDP, near Rome's projection of 5.9%.

(Source: Reuters)

• Kingston Properties Limited (KPREIT) has advised on new funding through Victoria Mutual Investments Limited (VMIL). It signed a $700Mn 13-month bridge loan which will be used to continue the expansion of its property portfolio. 
• This facility continues the series of fundraising exercises undertaken by the company to meet its strategic objective of increasing its equity to $10Bn and the footprint of properties under its ownership or management to one million square feet by 2023. 
• Kevin Richards, CEO, KPREIT said: “This round of financing will allow us to continue to expand our portfolio, mainly in the geographic regions that we have been operating in the last four years.” He added that the facility follows the Company’s 2019 rights issue, also brokered by VM Wealth Management, which raised $2Bn. 
• Richards further noted that the company is also looking to increase its investment in industrial properties over the next few years, in line with the growing logistics and E-commerce industry globally and will be exploring more value-added and greenfield projects in this space. KPREIT will also be broadening its reach in the US, particularly in States outside of the hurricane corridor and is currently at varying stages of execution of the deals in its pipeline. 
• KPREIT currently owns industrial, residential, office and retail properties in Jamaica, the US and the Cayman Islands. For the first quarter of 2021, it reported a 58% year on year increase in rental revenue to US$709,695 with net operating income (NOI) increasing by 123% to US$437,660, while net profit after tax (NPAT) increased to US$623,338 for the first quarter of 2021 compared to a loss of US$214,877 the prior year. 
• The company’s stock price has appreciated by 16.1% to $8.42 since the start of 2021, and currently trades at a P/B of 1.31x, which is above the main market real estate sector average of 0.97x.

(Source: JSE; NCBCM Research)

• The Criminal Justice (Suppression of Criminal Organizations) (Amendment) Act, 2021, commonly called the Anti-Gang legislation, was passed in the House of Representatives on Tuesday (June 1), with four amendments. 
• The amendments to the Act specify additional offences for activities in which criminal organizations are engaged, increase the number of offences under the Act, expand the list of aggravating factors to be considered when sentencing an individual convicted of certain offences under the Act, and improve the trial procedures in order to protect the identity of witnesses for connected matters. 
• Minister of National Security, Hon. Dr. Horace Chang, said that a strong legislative framework is critical in ensuring sustainable crime reduction. This is an important step in reducing its contribution to political risk, and improving the business environment, as the current crime rate acts as an impediment to domestic and foreign direct investments. Despite significant improvements in recent years, Jamaica's homicide rate was estimated to be 46.5 per 100,000 people in 2020, the highest in Latin American and the Caribbean (Fitch Solutions).

(Source: JIS; NCBCM Research)

• Bermuda will continue to run a substantial current account surplus in the years ahead on the strength of its primary income surplus. It is forecasted that Bermuda will run a current account surplus of 14.9% of GDP in 2021, largely unchanged from the 15.2% in 2020 and in line with the 14.0% average from 2015 to 2019. 
• Bermuda’s large primary income surplus is the main driver of its persistent current account surplus, which was the fourth-largest in the world in 2020. 
• A larger goods trade deficit will account for the modest decline in the current account surplus in the quarters ahead, as rebounding economic activity spurs goods import demand. 
• However, recovering tourism activity, particularly in H2 2021, will boost service exports, partially offsetting the wider goods trade deficit.

(Source: Fitch Solutions)

• Latin American sovereigns provided financial assistance to local and regional governments (LRGs) in 2020 through extraordinary transfers, debt relief measures, and additional loans to diminish the pandemic's harsh impact. 
• Brazil's substantial support prevented COVID-19 from squeezing local budgets; while aid to LRGs in Mexico and Argentina only mitigated fiscal erosion in 2020. 
• The subnational governments' finances could be pressured this year, as central governments shift away from propping LRGs' finances and towards fiscal correction and economic recovery, while the pandemic continues to take a severe toll on the region. 
• Meanwhile, limited financing sources will continue to constrain Latin American LRGs' fiscal room to maneuver through economic shocks. While the impact from the public health crisis on Latin American local government budgets has been less severe than initially expected, S&P believes that fiscal pressure is likely to mount this year. As central governments curb fiscal support for LRGs, their credit quality will depend on the economic recovery's trajectory, as well as on their financial performance. GDP of Mexico and Argentina will likely return to the pre-pandemic levels only by the fourth quarter of 2022 and even in 2023. Moreover, spending pressures remain because the region is still severely affected by the pandemic given the slow vaccine rollout.

(Source: S&P)

• The economic recovery continued to pick up pace, but the dearth of skilled labour and rising input prices are expected to continue in the months ahead, according to the Fed's Beige Book released Wednesday. 
• The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through May. 25, showed that while the economy continued its recovery, inflation and labour supply shortages have not ebbed.  
• Continuing supply chain disruptions have propped up inflation, with many "contacts noting sharp increases in construction and manufacturing raw materials prices. Increases were also noted in freight, packaging, and petrochemicals prices," the report showed. But the strengthening in demand has allowed some businesses in sectors including manufacturers, builders, and transportation to pass much of the cost increases to their customers.

(Source: Investing.com)

• Oil prices surged on Wednesday, hitting their highest in more than a year from a decision by OPEC and allies to stick to the plan to gradually restore supply, along with the slow pace of nuclear talks between Iran and the United States. 
• Brent rose $1.1, or 1.6%, to settle at $71.35 a barrel. It reached $71.48 a barrel, its highest since January 2020. U.S. West Texas Intermediate (WTI) crude rose $1.11, or 1.6%, to settle at $68.83 a barrel. It hit $69.00 during the session, its highest since October 2018. 
• "The oil market welcomed the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, decision to stick with its existing production plan, and in conjunction with positive global demand indications, prices are gaining further today," said Louise Dickson, Rystad Energy oil markets analyst. 
• Expecting a recovery in demand, OPEC+, agreed on Tuesday to maintain their plan to gradually ease supply curbs through July. 
• The OPEC+ meeting took 20 minutes, shortest in the group's history, indicating unity among members and their confidence in the market's recovery, analysts said. OPEC+ data shows the group is now more upbeat about the pace of rebalancing in the oil market than it was a month ago.

(Source: Reuters)

• Greater revenues and lower indirect expenses supported a 40.5% (or $397.96Mn) year-over-year increase in Lasco Manufacturing’s audited net profit to $1.40Bn (EPS$:0.33). Owing to the effects of product mix and gains in manufacturing efficiencies, revenues were able to grow by 4.2% (or $332.00Mn) and influence a 90 basis point increase in the gross margin. Cost containment measures were also very instrumental in the improvement in net profit. Selling and promotional expenses fell by 53.0% (or $154.16Mn), while admin and other expenses dropped by 13.0% (or $177.13Mn). 
• In 2020 the Junior market tax break ended and the full income tax rate of 25% became applicable to the company’s earnings. Higher tax expenses ($159.06Mn) and a $135.33Mn rise in the cost of sales, therefore, tempered the overall improvement in LASM’s financial performance. 
• Management has indicated that notwithstanding the roll-out of effective vaccines and mass vaccinations to contain the virus and its adverse impacts, material prices and shipping costs are escalating, while the general availability of some materials become problematic. These and other headwinds, such as currency volatility and depressed consumer purchasing power, may adversely affect the company in the near-term. 
• Management has also indicated that it will continue to give special attention to cost as well as cash management, and protecting its supply chain to minimize the impact of the pandemic on the business. 
• The stock has appreciated by 45.1% since the start of 2021 and currently trades at a P/E of 16.7x, which is below the Junior market manufacturing sector average of 17.5x.       

(Source: Company Financials)

• Real GDP in Brazil grew 1.0% y-o-y in Q1 2021, outperforming prior expectation of stagnant 0.0% growth. The figure suggests that despite continuing to have one of the world's worst COVID-19 outbreaks, the government's avoidance of imposing nationwide restrictions on mobility has allowed its economy to continue to trend towards pre-pandemic levels. 
• Growth was led by gross fixed capital formation, which grew 17.0%, offsetting declines of 1.7% and 4.9% in private and public consumption, respectively. 
• Consequently, Fitch Solutions has revised its annual growth forecast to 3.5%, from 3.2% previously. Bloomberg consensus expectations also moved up, to 3.5% from 3.0% in late April, reflecting relatively resilient high-frequency data from Q1 2021 and the approval of additional household income support measures in the 2021 budget enacted in April. 
• While Fitch expects strong y-o-y growth in Q2 due to favourable base effects, the agency nonetheless retained its expectation that the pace of Brazil’s rebound will slow in the second quarter of this year and be visible in a weak q-o-q growth print. 
• As of the end of May, new confirmed cases and deaths due to COVID-19 remain near the highest levels of the crisis yet, which has triggered a retightening of restrictions in some localities and disruptions to some economic activity. 
• The aforementioned factors have resulted in an unemployment rate of 14.7% in March, the highest level since at least 2012. The disruptions to emergency aid payments, rising inflation (6.8% y-o-y in April), and interest rate hikes, have increased the risk of rising debt burdens.

(Source: Fitch Solutions)