• Strained relations between China and Australia took a turn for the worse Thursday after Beijing said it has “indefinitely” suspended all activity under a high-level economic dialogue with one of its largest sources of imports.
• It was not immediately clear what impact the announcement would have on trade between the two countries, which has already fallen amid retaliatory pressure from Beijing.
• The Australian dollar weakened against the U.S. dollar following the news, falling close to breaking 77 cents after trading near 77.47 cents Wednesday. Beijing’s economic planning agency, the National Reform and Development Commission, said in an English-language statement Thursday that some Australian officials recently launched unspecified measures “out of a Cold War mindset” to disrupt cooperation with China.
• The commission said that based on this attitude, it has decided to “indefinitely suspend all activities under the framework of the China-Australia Strategic Economic Dialogue.”

(Source: CNBC)

• U.S services industry activity grew at a slightly slower pace in April, likely restrained by shortages of inputs amid a burst of demand that is being driven by massive fiscal stimulus and a rapidly improving public health environment.
• The Institute for Supply Management (ISM) said on Wednesday its non-manufacturing activity index fell to a reading of 62.7 last month from 63.7 in March, which was the highest on record. A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity. Economists polled by Reuters had forecast the index rising to 64.3 in April.
• The findings mirrored the ISM’s manufacturing survey published on Monday showing bottlenecks in the supply chain constraining factory activity in April. The economy is experiencing a boom in demand, thanks to the White House’s massive $1.9 trillion pandemic relief package and the expansion of the COVID-19 vaccination program to all adult Americans.

(Source: Reuters)

• For the 9 month period ending March 2021, Pulse Investments reported a net profit of $928.01Mn (EPS: $0.15), which translates to a 27.4% increase over the same period in the prior year.
• Its performance was bolstered by fair value appreciation on an investment property (37.3% or $162.74Mn), and an 11.7% (or $55.49Mn) increase in revenue.
• The company recently received $1.20Bn in the financing, with $440.00Mn coming from a loan facility and a $771.00Mn note issued to a related party. The proceeds were used to acquire Villa Ronai ($640.00Mn) and $571.00Mn was used to retire debt. 
• Pulse plans to commence construction of 30 two and three-bedroom homes in the valley at Villa Ronai, with completion scheduled for 2024. This should bolster future income.
• The company’s stock price has depreciated by 11.8% since the start of the year, closing trading at $4.26. It currently trades at a P/E of 26.6x earnings, above the main market average of 24.0x earnings.

(Source: Company Financials)

• President of the Jamaica Hotel and Tourist Association (JHTA), Clifton Reader, says there continues to be a low COVID-19 positivity rate across accommodations and attractions in the country.
• He said that based on test results for tourists and staff, figures are showing that there is a less than 1.0% positivity rate in the tourism sector. Widespread implementation of COVID-19 health and safety protocols in the sector is behind the continued low rate.
• This together with successful containment of COVID-19 positivity rates and greater vaccination in the general population, bodes well for future arrival levels, as tourists from the fast recovering source markets will be more inclined to visit the island.

(Source: JIS News)

• Fitch Solutions expects that Biden is likely to loosen US sanctions on Cuba, albeit in the medium term as domestic issues have taken the president’s immediate interest.
• The medical device market in Cuba will be heavily reliant upon improved US relations going forward. Limited global trade and waning public health infrastructure could see improvements if diplomatic relations between Cuba and the US are restored.
• Following the announcement that Raúl Castro stepped down as head of Cuba’s Communist Party in April 2021, Biden has an opportunity to commune with a more favorable head Miguel Díaz-Canel, that has begun reforms that would match the political ideology of the Biden administration.
• The agency believes that improving relations with the US would open Cuba’s economy for growth and represent better prospects for its healthcare markets, especially following the exit of Raúl Castro; which could represent the beginning of an era of improved Cuba-US relations under Díaz-Canel.

(Source: Fitch Solutions)

• The Venezuelan government has taken a number of steps to adjust its foreign policy in recent weeks, including accepting aid from the World Health Organization (WHO) and the UN and attempting to court the Biden administration in the US.
• These changes are likely aimed at reinforcing the Maduro regime’s hold on domestic power, by further sidelining the opposition and opening the door to sanctions relief.
• However, while engagement with the WHO and UN is likely to continue on some level, significant sanctions relief is not Fitch Solutions’ core view, given that Venezuela is unlikely to meet the US’s demands for electoral concessions.

(Source: Fitch Solutions)

• The U.S. trade deficit jumped to a record high in March amid roaring domestic demand, which is drawing in imports, and the gap could widen further as the nation's economic activity rebounds faster than its global rivals.
• Manufacturers lack the capacity to satisfy the surge in demand because of resource constraints and bottlenecks in the supply chain. Inventories are very lean. Demand is being driven by a rapidly improving public health situation and massive government aid to households and businesses to cushion the blow from the COVID-19 pandemic.
• "The widening of the trade gap will likely be a persistent feature of the economy this year as domestic demand outstrips the U.S. economy's productive capacity," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
• The trade deficit increased 5.6% to an all-time high of $74.4 billion in March, the Commerce Department said on Tuesday. The trade gap was in line with economists' expectations.
• Imports soared 6.3% to a historic $274.5 billion in March. Goods imports shot up 7.0% to $234.4 billion, also an all-time high. Imports of consumer goods were the highest on record, as were those for food and capital goods.

(Source: Reuters)

• Hong Kong’s economy posted its fastest growth in more than a decade in the first quarter, though the recovery is an uneven one led mainly by exports and held back by weak consumer spending and a slow vaccine rollout.
• After declining for a record six quarters, gross domestic product surged 7.8% from a year earlier, advance data showed Monday, beating all estimates in a Bloomberg survey of economists. The figures were partly distorted by the low base a year ago when the economy was in lockdown, but the quarter-on-quarter expansion, a better reflection of growth momentum, also outperformed estimates.
• The latest data show an export sector that’s booming but consumption that remains subdued. The city’s hotels and retail shops are reliant on tourism spending, especially from visitors from the mainland, and border closures have hurt those sectors. Low vaccination rates are hindering the city’s ability to reopen and fully rebound from the pandemic.
• Hong Kong has endured its most economically challenging two-year stretch in its history, posting unprecedented back-to-back annual contractions in 2019 and 2020 as the city grappled with waves of political unrest, the fallout from the deteriorating U.S.-China relationship, and the Covid-19 pandemic.
• The economy has recently shown signs of a stronger recovery. Exports surged above HK$400 billion ($51.5 billion) for the first time ever in March while unemployment dropped the most since 2003 in the month, easing back from a 17-year high. Retail sales by value jumped 30% in February, the first increase in that measure since January 2019.​

(Source: Bloomberg)

• For the first quarter ending March 31, 2021, Mayberry Jamaican Equities Limited (MJE) saw a significant improvement in its operating performance with the company recording a net profit of $299.71Mn (EPS $0.25) relative to a net loss of $1.13Bn (EPS: -$0.93) in Q1 2020.
• Unrealized gain of $281.61Mn on its investments relative to a loss of $1.12Bn in the prior year, along with a $110.28Mn increase in dividend income to $118.75Mn were behind the improvement. The increases in unrealized gains and dividend income are likely a reflection of the improvement in the performance of the local stock market during Q1 2021 (+0.7%), when compared to the steep fall-off seen in 2020 (-26.0%) as a result of the COVID-19 induced sell-down.
• The stock market is expected to fare better in 2021 aided by the economic rebound during the second half of the year, as major economies continue to recover, and as the government continues the rollout of the COVID-19 vaccine and relaxes restrictions. This should support domestic consumption and production, which bodes well for a recovery in corporate earnings and investor confidence.
• Nevertheless, we believe there is a concentration risk to the performance of MJE’s portfolio with a 46.9% exposure to Supreme Ventures. SVL's earnings could come under pressure, given the emergence of competitors in the lottery business.
• MJE’s stock price has appreciated by 1.7% since the start of the year and currently trades at $8.12 per share. This is 26.6% below the last reported net asset value per share (NAVPS) of $10.28.

(Source: MJE Financials)

• Jamaica Bauxite Mining Limited (JBM) is looking to commence work to upgrade the Ocho Rios Port during the current fiscal year. This is according to the 2021/22 Public Bodies Estimates of Revenue and Expenditure, which states that the exercise will serve to enhance the facility’s business activities while maximizing revenue.
• The renovation will result in the establishment of a multipurpose facility that allows for continued loading and shipment of limestone and sugar as well as additional and larger cruise ships. The engagement forms part of JBM’s efforts to continue stakeholder collaborations this year to promote responsible mining practices and speedy restoration of mined lands, all aimed at preserving the environment.
• This should help to support the country’s path to economic recovery, through increased construction activities as well as aid in the recovery of the mining industry.

(Source: JIS)