• The Jamaican dollar (JMD) will depreciate over the coming months due to a widening current account deficit and loose monetary policy.
• In the long term, Fitch expects the JMD to weaken steadily as a slow economic recovery weighs on investors’ expected returns and the Bank of Jamaica (BOJ) continues to reduce its participation in the foreign exchange market.
• Fitch revised its 2020 forecast average to JMD144.0/USD, from JMD139.3/USD previously, and its 2021 forecast to JMD149.0/USD, from JMD143.2/USD.

 (Source: Fitch)

• The Short-Term Political Risk Index score for the Dominican Republic of 67.0 out of 100 is now higher than last quarter's score of 65.9. While the election of opposition candidate Luis Abinader in the July 2020 election represents a change in power from the ruling Partido de la Liberación Dominicana (PLD), this shift poses little risk to policy continuity.
• In addition, Abinader's party, the Partido Revolucionario Moderno (PRM), secured majorities in both houses of Congress, which will support policymaking.
• The Dominican Republic scores well in almost every sub-component, yet its score in the 'social stability' sub-component remains below the regional average. This is primarily due to a high level of inequality, persistent tensions with the Haitian migrant community and perceived impunity for government officials accused of corruption.
• Risks to social stability have increased this quarter due to the Covid-19 pandemic, which will push unemployment higher and may cause public unrest in the near term.  

(Source: Fitch)

• The impact of the coronavirus pandemic on Latin America's economic growth and public finances continues to put pressure on sovereign credit profiles, Fitch Ratings says in a new report.
• This is reflected in the high proportion of sovereign ratings on Negative Outlook in the region, even after a number of downgrades this year.
• The proportion of Latin American sovereigns on Negative Outlook has almost doubled since end-2019 to about 70% (excluding those rated 'CCC' or below, where Fitch does not assign Outlooks).
• The region has become the new hotspot for the pandemic, having initially recorded far fewer COVID-19 cases than affected countries in Europe and Asia.
• Despite some recovery in commodity prices (especially copper), Fitch has continued to revise down 2020 GDP forecasts for the region and its largest economies to reflect weak incoming data, the extension of lockdowns in some countries, difficulty in easing social distancing measures, and the risk of prolonged economic pain where attempts to contain the virus have been less effective.

(Source: Fitch)

• China’s Foreign Ministry announced Friday it is revoking the license for the U.S. consulate general in the southwestern city of Chengdu.
• The consular covers the autonomous region of Tibet, the municipality of Chongqing, and the provinces of Sichuan, Yunnan and Guizhou.
• The announcement came after the U.S. ordered China to close its consulate in Houston, citing efforts to protect American intellectual property and the private information of its citizens.

(Source: CNBC)

• Concerns that the U.S. economic recovery may be faltering sent a chill through global markets, hitting risk assets and supporting havens.
• The yield on the U.S. 10-Year Treasury note fell to 0.56%. It has only ever closed below that level once, back in April. Gold futures, however, failed to break through the $1,900 level for the second day in a row.
• The move was triggered on Thursday by a combination of a rise in weekly initial jobless claims and a fresh delay to the announcement of Republican plans for the next package of stimulus measures. These will now only be published next week, according to Senate Majority Leader Mitch McConnell.

(Source: Investing.com)

• For the three months ended May 31, 2020, Caribbean Cream Ltd. (KREMI) reported a 31.2% (or $6.43Mn) increase in net income relative to the corresponding period in 2019. Net Profit rose from $20.62Mn (EPS: 5¢) in 2019 to $27.06Mn (EPS: 7¢) in 2020.
• This favorable result was largely due to a 2.9% (or $12.31Mn) increase in revenue, a 1.9% (or $2.05Mn) decline in administrative and selling & distribution expenses as well as a 44.4% (or $2.69Mn) fall in finance cost.
• The stock price has fallen 1.9% since the start of the calendar year and closed Monday’s trading session at $3.54. At this price, the stock currently trades at a P/E of 22.1x earnings, which is above the Junior Market Manufacturing Sector Average of 21.9x.

(Source: KREMI Financials)

• For the nine months ended May 2020, net profit at AMG Packaging Paper Company Limited rose 5.4% (or $1.94Mn) up to $37.83Mn (EPS: 7¢).
• A 13.7% (or $63.14Mn) decline in cost of sales, despite a 9.2% (or $54.11Mn) drop in revenues was the main contributor to the improvement in the company’s bottom line.
• The company’s stock price has fallen 14.7% since the start of the year, closing Monday’s trading session at $1.80. At this price, the stock currently trades at a P/E of 15.0x earnings, which below the Junior Market Manufacturing Sector Average of 21.9x.

(Source: AMG Financials)

• Accelerating oil production and sustained investment will underpin a significant economic expansion in Guyana over the coming quarters, bucking the global headwinds from the Covid-19 pandemic.
• Fitch Solutions forecasts that the Guyanese economy will grow 24.6% y-o-y in 2020 and 18.5% in 2021, from an estimated 4.7% in 2019.
• That said, ongoing political uncertainty and the lack of high-frequency economic data present significant risks to our forecast, particularly if the US or other foreign governments authorize sanctions against Guyanese government officials for refusing to leave office after the March 2020 election.

(Source: Fitch Solutions)

• Three groups of bondholders have responded to a proposed bond swap from Ecuador with two groups rejecting it and one expressing support, according to separate statements on Monday.
• A group of 25 institutional investors, including Amundi, Contrarian Capital Management, Grantham Mayo Van Otterloo (GMO) and T Rowe Price, dismissed the offer, saying "the terms... do not represent Ecuador's best effort to reach an equitable restructuring with a majority of bondholders or its ability to implement social development goal principles to build a sustainable future."
• Another group of holders of Ecuador's 2024 notes also refused Ecuador's offer. Together, the two groups hold more than 25% of Ecuador's bonds and more than 35% in certain series.
• On the other hand, a group of bondholders that includes AllianceBernstein, Ashmore Group, Ayres Management, BlackRock, BlueBay Asset Management and Wellington Management came out in support of Ecuador's plans to restructure $17.4Bn in outstanding bonds. The group, which calls itself the Ad Hoc Group of Ecuador Bondholders, holds more than 53% of Ecuador's sovereign bonds.

(Source: LatinFinance)

• British government borrowing surged to a record £127.9Bn in the first three months of the 2020/21 financial year, when COVID-19 lockdown measures were at their tightest, official figures showed on Tuesday.
• Public sector net borrowing between April and June was £103.9Bn higher than in the same three months last year, and more than double the £55.4Bn borrowed in all of the 2019/20 tax year which ended in March.
• Public sector net debt, excluding state-owned banks, rose to £1.984Tn, which Britain’s Office for National Statistics said was equivalent to 99.6% of gross domestic product - also a downward revision compared with May.

(Source: Reuters)