• The Bank of England is likely to ease its foot off the stimulus pedal and reduce its pace of bond purchases next week as Britain's economy appears to be bouncing back sharply from its COVID pandemic slump.
• Retailers and restaurants are reopening, retail sales exceeded pre-pandemic volumes in March and purchasing managers' indexes in April hit their highest since 2013 as a rapid vaccination program helped reduce a devastating flood of COVID-19 cases at the start of the year to a trickle.
• Just over three months ago, financial markets saw a roughly 50% chance that the BoE would need to cut interest rates below zero for the first time later this year. Now speculation has turned to whether its Monetary Policy Committee will begin to raise rates from their current 0.1% towards the end of 2022.
• A first step is likely to come next week if the BoE slows its government bond purchases from the current pace of 4.4 billion pounds ($6.14 billion) a week, according to economist Phillip Shaw and several other economists.

(Source: Reuters)

• Despite the continued local and global impacts of the coronavirus, Portland JSX Ltd. achieved a 57.3% increase in net profit for the year ended February 2021 to US$2.12Mn (EPS: US$0.68).
• The improvement in the bottom-line was driven by a 12.8% (or $294.45K) increase in net fair value gains on financial instruments, a $312.31K rise in foreign exchange gains, and a 27.0% (or $223.83K) reduction in operating expenses.
• The increase in fair value gains reflects the recovery in financial markets from the effects of the pandemic, while expenses fell due to significant reductions in management, legal, audit, general and other operation fees.
• The company recently refinanced its $520Mn debt with a $600Mn issue. According to management, this refinancing increased the company’s financial flexibility and better positions it to manage potential risks as well as seize opportunities as they arise.
• After increasing by 31.9% during 2020 to $9.50, the company’s stock price has fallen by 15.8% since the start of 2021, closing Wednesday’s trading session at $8.00.

(Source: Portland JSX Financials)

• For the year ended December 2020, Consolidated Bakeries (Purity) reported a net loss of -$14.42Mn, a deterioration from the net loss of -$12.49Mn reported for the same period in 2019.
• The higher losses reflect a 3.2% (or $33.29Mn) reduction in revenues and a 5.6% (or $11.53Mn) rise in admin expenses. The company’s revenues were impacted by the government-imposed restrictions to stem the spread of the virus such as school closures, and the fall in employment which impacted consumers’ purchasing power.
• However the falloff in the revenues and rise in indirect expenses were largely tempered by a 6.3% (or $40.48Mn) drop in the cost of sales, which was fueled by reductions in salaries and related expenses, purchases, repairs, and maintenance and transportation costs.
• Purity was reporting a net loss before the onset of the pandemic. Therefore, although the company should realize a gradual improvement in its revenues as further inoculation of citizens and containment of the virus influence a relaxation of restrictions especially the re-opening of schools, and greater tourism activity, without implementation of cost reduction strategies, the company is unlikely to return to a positive outturn in the near term.
• Following an 18.7% decline during 2020 to $1.35, the company’s stock price has risen by 25.9% since the start of 2021, closing Wednesday’s trading session at $1.70.

(Source: Consolidated Bakeries Financial Statements)

• Colombia’s government has lowered the amount of money it hopes to raise from proposed tax reform in an effort to win enough support to push the legislation through Congress, Vice Finance Minister Juan Alberto Londono said on Wednesday.
• The government is now looking to raise between 18 trillion and 20 trillion pesos ($4.84 billion to $5.38 billion), Londono said. He added that it was open to negotiating other parts of the proposal, which includes measures to reduce sales tax exemptions and change income taxes.
• The original plan presented to lawmakers last week sought to raise an additional 23.4 trillion pesos ($6.29 billion) - equivalent to 2% of Colombia's gross domestic product (GDP) - by eliminating many deductions and increasing duties on individuals and business.
• The government is looking for consensus and for ways to cover the gap so that the country can pay its debt while protecting the vulnerable population from a reduction in expenditure on social programs.
• The proposed reform has met stiff resistance in Congress, including from a coalition of parties that supports President Ivan Duque's government. Opponents argue the changes would unnecessarily burden taxpayers already stretched by the economic crisis caused by the coronavirus pandemic.

(Source: Reuters)

• Mexican President Andres Manuel Lopez Obrador said on Wednesday he plans to send initiatives to Congress aimed at carrying out administrative reforms of autonomous bodies, which he has criticized as unnecessary or lacking impartiality.
• "We're going to continue transforming so that the government serves everyone, that it's a government of the people, for the people, with the people ... not a factional government only at the service of a minority," Lopez Obrador told a regular news conference as he set out his reform plan.
• Lopez Obrador argues government watchdogs and regulators created under his predecessors are biased and cost money that would be better spent on social programs. He has suggested that some be absorbed by government agencies or ministries.
• If enacted, these reforms will help to reduce government expenditure on public services and open up funds available for investment or growth purposes.

(Source: Reuters & NCBCM Research)

• The Federal Reserve on Wednesday kept its easy monetary policy in place despite an economy that it acknowledged is accelerating.
• As expected, the U.S. central bank decided to keep short-term interest rates anchored near zero as it buys at least $120 billion of bonds each month. The latter part of the policy is a two-pronged effort to support an economy that grew strongly to start 2021 as well as to support market functioning at a time when 30-year mortgages still go for around 3%.
• Despite noting the economic strength and inflation that is on the rise, even if only temporarily, the policymaking Federal Open Market Committee unanimously decided to make no changes in its approach and gave no indications that things will change anytime soon.
• Fed Chairman Jerome Powell said the recovery is “uneven and far from complete.” While he noted that inflation pressures could rise in the coming months, these “one-time increases in prices are likely to only have transitory effects on inflation.”

(Source: CNBC)

• The U.S. dollar is expected to continue declining, pressured by rising trade and fiscal deficits along with recovering growth that is being powered by a rise in commodities prices, a fund manager and two economists said.
• However, a rise in real yields in the United States backed by a strong recovery in the economy will keep the dollar from falling drastically, Binay Chandgothia, managing director and portfolio manager at Principal Global Investors in Singapore, told the Reuters Global Markets Forum on Wednesday.
• "My sense is that the dollar weakens a tad more, (by about) 2%-5%, from here," said Chandgothia, whose firm manages nearly $545 billion in assets. He added that the dollar could get a lift from the U.S. Federal Reserve changing its stance as this will start pushing up real yields at the short-to-medium end.
• Robert Carnell, chief economist and head of research at ING Asia in Hong Kong, said he expected the Fed taper to likely come at a time when U.S. inflation will be dipping and prices in Europe will be picking up.

(Source: Reuters)

• Robust COVID-19 vaccination programs in key source markets will power a strong rebound in Jamaica’s sizeable tourism industry in H2 2021.
• The resumption of flights from major airlines such as Virgin Atlantic, British Airways, and Frontier to Jamaica as early as May 28, and the sizeable fiscal stimulus in the US, which accounted for 68.6% of stop-over arrivals in 2019, will further bolster tourism demand.
• In addition to boosting service exports, the turnaround in the tourism industry will build on recent employment growth, fueling private consumption. Private consumption, which accounted for 76.2% of GDP in 2019, is expected to grow by 3.2% y-o-y in 2021 as businesses in the tourism sector re-hire workers. Unemployment is forecasted to average 8.0% in 2021, down from 8.9% at end-2020, which should boost household incomes, and thereby private consumption growth.
• A brightening growth outlook and loose monetary policy will support investment growth of 3.0% y-o-y in 2021. The brightening economic outlook should boost business confidence in the quarters ahead, which will lead to a rebound in investment. Moreover, the expected return of tourism activity will likely further incentivize investment.
• Fitch Solutions has revised its 2021 real GDP growth forecast to 3.0% y-o-y, up from 2.5% previously, as the widespread availability of COVID-19 vaccines in source markets will lead to stronger tourism demand than previously expected.
• The continued spread of COVID-19 poses downside risks to Jamaica’s growth outlook. The government has so far relied on donations from wealthier nations and the COVAX facility. As a result, Fitch Solutions does not expect Jamaica to vaccinate all priority populations until 2022. This will leave the population vulnerable to additional outbreaks of the disease, which would likely prompt the government to re-impose restrictions on mobility and commercial activity.

(Source: Fitch Solutions)

• On April 27, 2021, Tourism Minister, Hon. Edmund Bartlett participated in a successful meeting with Saudi Arabia’s Minister of Tourism, His Excellency Ahmed Al-Khateeb, to discuss investment opportunities and other possible areas of collaboration between both nations.
• The Ministers discussed the possibility of Jamaica benefiting from the US$100.00Mn development fund the Government of Saudi Arabia has established in collaboration with the World Bank for small enterprises. They discussed how Jamaica can benefit from investment in various areas including tourism infrastructure, particularly the new tourism destination being developed in St. Thomas.
• The ministers also discussed the tourism development collaborative effort that Jamaica and Saudi Arabia will establish, including the establishment of a Global Tourism Resilience and Crisis Management Centre in Riyadh and collaboration with regards to sustainability and resilience projects.
• This new relationship will help in the post-COVID growth of the sector and enhance its contribution to economic growth.

(Source: JIS News)

• Brazil’s central bank is at risk of having to raise interest rates more than expected just a month after surprising investors with a bold rate hike, according to former central bank chief Gustavo Loyola.
• The central bank raised the benchmark funds rate by 75 basis points to 2.75% last month and indicated another increase of the same size in May. The move -- the first this year among the Group of 20 nations -- surprised economists, who had expected a 50 basis point hike, but now traders are already pricing in an even stronger tightening, according to Loyola.
• The recent agreement over this year’s budget left several loose ends that will continue to spark uncertainty about the country’s fiscal accounts, further complicating the central bank’s job, he said.
• The steady rise in COVID-19 infection rates since November of last year continues to cast a shadow on economic prospects for Brazil as consumers and businesses struggle to reconcile the urge to stay safe with the need for incomes and revenues. This along with reductions in fiscal support as the government turns to heal its finances, and the now less accommodative monetary policy to contain inflation, will adversely impact the recovery forecasts for consumers and corporates, and result in only a modest expansion in 2021.

(Source: Bloomberg & NCBCM Research)