• Pulse Investments Limited’s audited net profit for the financial year ended June 30, 2020, grew 28.6% (or $187.13Mn) year over year to $840.36Mn (EPS: $0.13).
• Net profit growth was supported by a 9.4% (or $58.19Mn) and 32.7% (or $143.87Mn) increase in revenues and other income, respectively. However, a 5.0% (or $18.79Mn) rise in administrative and other expenses, as well as a 99.0% (or $6.30Mn) increase in finance cost moderated the overall impact of income growth on Pulse’s bottom-line.
• Despite the strong full-year performance, the pandemic has affected Pulse’s international model agency commission, rooms business, and Caribbean Fashion week’s live staging, which caused a reduction in income for the fourth quarter.
• However, with those revenue streams representing just over 10% of the company’s business and the greater portion of the financial year unaffected by the novel Coronavirus, there was no significant impact on the 2020 financial statements as there was reduced cost and increased income and profit from other areas such as media as well as gains on an investment property.
• The company’s stock price has declined by 35.7% since the start of the year, closing Tuesday’s trading session at $3.86. At this price, the stock currently trades at a P/E of 29.7x earnings, which is above the Main Market Industrials and Materials Sector Average of 20.9x.

(Source: PULS Financials)

• Fitch Solutions forecasts that the Honduran lempira (HNL) will average HNL24.77/USD in 2020, down slightly from its average of HNL24.74/USD in the year through August 31.
• It is expected that the lempira will weaken in the coming months as the Banco Central de Honduras (BCH) lowers its benchmark monetary policy rate, in an effort to support the supply of credit to households and business during Honduras’ sharp COVID-induced recession. The BCH’s easing will narrow the interest rate differential between Honduras and developed markets, weakening the appeal of Honduran assets.
• Fitch solutions except for the value of the lempira to continue declining in the long-term, averaging HNL25.5/USD in 2021 as the BCH further reduces its participation in FX markets, while monetary policy remains loose and the continued spread of Covid-19 undermines the outlook for the Honduran economy.
• As part of its 2019 agreement with the IMF, the BCH is increasingly allowing market forces to determine the value of the lempira. At the same time, it is expected that the BCH will hold its benchmark policy rate steady at 3.25% through end-2021 in order to boost economic activity.

(Source: Fitch Solutions)

• On August 27, the Banco de México (Banxico) released the minutes from its monetary policy meeting on August 13, at which policymakers decided to cut the bank’s benchmark interest rate by 50 basis points (bps), to 4.50%. This was the fifth consecutive 50bps cut and brought total cuts since the beginning of the current easing cycle in August 2019 to 375bps.
• The decision, unlike the previous four, was not unanimous, as one board member voted for a 25bps cut instead. The bank also released its Q2 2020 Quarterly Report on August 26, in which it lowered its 2020 real GDP forecast sharply while raising its inflation forecast above the 3% target.
• As a result, Fitch Solutions revised its end-2020 interest rate forecast to 4.25%, from 4.50% previously, based on its expectation that the bank will slow the pace of cuts to 25bps at its meeting on September 24. The bank will then hold the rate at 4.25% through the end-2021.

(Source: Fitch Solutions)

• The pace of job gains over the next decade will slow considerably amid a sharp decline in the active labor force and an aging population, according to Labour Department projections released Tuesday.
• From the period of 2020-29, the economy is expected to add a net 6 million new jobs, an annual growth rate of just 0.4%, the Bureau of Labour Statistics estimates. 
• That compares with the 1.3% annual rate during the 2009-19 period, which got a boost from the Great Recession recovery that started in mid-2009 and ended up being the longest expansion in U.S. history before it ended in February of this year.
• Outside of the pandemic, job creation is expected to slow amid demographic changes and a sharp increase in productivity brought on in part by technological changes.

(Source: CNBC)

• Oil rose towards $46 a barrel on Wednesday, gaining for a third day, supported by a report that U.S. crude inventories fell, and as surveys showing stronger manufacturing raised hopes of economic recovery from the coronavirus pandemic.
• U.S crude stocks fell by 6.4 million barrels, the American Petroleum Institute (API) said, more than forecast. Manufacturing surveys around the world showed expanding activity in August, although the outlook remains shaky.
• Brent crude LCOc1, the global benchmark, was up 31 cents, or 0.7%, at $45.89 a barrel, climbing for the third day. U.S. West Texas Intermediate CLc1 rose 28 cents, or 0.7%, to $43.04.

(Source: Reuters)

• Jamaica Broilers Group Limited reported a 12.4% (or $45.66Mn) increase in net profit attributable to shareholders to $414.06Mn (EPS: $40.60), for the three months ended August 1, 2020, relative to the corresponding 2019 period.
• Though the company realized a 5.1% (or $678.74Mn) decline in revenues, owing to the impacts of COVID-19, this was outweighed by a 3.0% ($302.21Mn) drop in the cost of sale, a 16.5% (or $375.23Mn) decline in administrative and other expenses, and a 255.3% ($194.96Mn) rise in other income during the period.
• Management attributes JBG’s improved results in early decision-making, aggressive cost reductions, and improved FX positions. It has also refocused on the absolute basics to keep the company running profitably due to the challenges brought on by COVID-19 which has translated into a better and deeper foundation for the company.
• The company’s stock price has decreased by 40.8% since the start of the year, closing Thursday’s trading session at $24.23. At this price, the stock currently trades at a P/E of 17.1x earnings, which is below the Main Market Distribution & Manufacturing Average of 22.6x.

(Source: JBG Financials)

• Prior to the Covid-19 pandemic, Fitch Solutions expected the Grenadian government would regularly run budget surpluses and remain committed to its Fiscal Responsibility Law (FRL), which has been in place since 2015 and targets bringing public debt below 55.0% of GDP.
• However, the agency now expects a fiscal deficit of 2.4% of GDP in 2020, from a 4.1% surplus in 2019, as restrictions on domestic commerce and government stimulus measures cause the first budget shortfall in five years.
• Grenada’s historic recession, which is forecasted at 13.7% y-o-y in 2020, will significantly undermine government receipts from tourism and other service sectors.
• While high-frequency data are not available to highlight the diminished activity, Prime Minister Keith Mitchell’s government enacted a strict stay-at-home order from March to May and closed the international airport to international flights from March until August.

(Source: Fitch Solutions)

• The Dominican government’s response to Covid-19 will push the fiscal deficit to a historic high of 6.5% of GDP in 2020. Fitch expects the Covid-19 shock will derail the country’s robust economic growth trajectory of the last decade, causing a 4.7% contraction in 2020 and significantly undermining short-term public revenues.
• Moreover, the Dominican government has implemented countercyclical fiscal stimulus measures to support recently unemployed and low-income workers, which will push expenditures higher.
• As Covid-19 cases in the Dominican Republic remain elevated, it is expected that the government will increase spending on health care operations and transfer payments into 2021.
• The budget shortfall is projected to narrow slightly, to 5.8% of GDP in 2021, but remain well above the five-year average deficit of 1.6% over the coming years.

(Source: Fitch Solutions)

• The Federal Reserve on Thursday rolled out a sweeping rewrite of its approach to its dual role of achieving maximum employment and stable prices, putting new weight on bolstering the U.S. labor market and less on worries about too-high inflation.
• The Fed’s new monetary policy strategy pledges to address “shortfalls” from the “broad-based and inclusive goal” of full employment, a nod to research showing racial income disparities hold back economic growth.
• It also promises to aim for 2% inflation on average, so that periods of too-low inflation would likely be followed by an effort to lift inflation “moderately above 2% for some time.”
• The change suggests the U.S. central bank’s key overnight interest rate, already near zero, will stay there for potentially years to come as policymakers woo higher inflation.

(Source: Reuters)

• The rebound in U.S. consumer spending moderated in July amid a surge in virus cases, with outlays at risk of further softening after cuts in supplemental relief payments for jobless Americans.
• Household outlays rose 1.9% from the prior month following an upwardly revised 6.2% rise in the prior month, a Commerce Department report showed Friday. That compared with economists’ estimates for a 1.6% gain. Personal incomes rose 0.4%, topping expectations for a slight decline.
• The deceleration in spending -- which accounts for about two-thirds of the economy -- marks a tempering in the economic recovery following two months of stronger gains.
• While spending has increased in recent months, total outlays remain below pre-pandemic levels. Spending could take a further hit in August after the expiration of the extra $600 in weekly jobless benefits at the end of July, which had propped up incomes and consumption.

(Source: Bloomberg)