• Fitch Solutions expects surging oil revenues will narrow the Guyanese government’s fiscal deficit over the coming years even as the current administration drastically increases spending. 
• The agency forecast the budget deficit will narrow to 4.7% of GDP in 2021 and 3.2% in 2022, from 5.8% in 2020. 
• While the country’s debt stock will rise from 34.7% of GDP (2020) to finance its deficit, it is expected that the debt will peak at 36.0% of GDP in 2021, and stabilise thereafter as substantial economic growth helps to contain debt accumulation.

(Source: Fitch Solutions)

• Over the past month, Fitch Solutions has made downward revisions to its growth outlook for the US and China. For the US, the 2021 growth forecast was lowered from 6.2% to 6.0% on the back of continued supply-side challenges. 
• For China, Fitch revised its growth forecast from 8.5% to 8.3%. This has placed downside pressure on the 5.7% global growth forecast that it has penciled in for the full year, and consensus global growth expectations have declined slightly from 6.0% to 5.9% over the past month. 
• These dynamics are confirmed by high frequency data such as exports, purchasing managers' index (PMI) surveys, credit growth and confidence indicators - all of which point to the fact that growth peaked several months ago. Looking to 2022, Fitch forecasts another year of above-trend growth of 4.2% although it is also slightly below consensus estimates of 4.5%. Continued progress in terms of vaccinations and only a gradual removal of policy support underpin the view for still-strong growth.

(Source: Fitch Solutions)

• World stocks sold off sharply on Monday while safe-haven assets gained as troubles at property group China Evergrande fed concerns about spillover risks to the economy, sparking fresh investor worries ahead of a busy week of central bank meetings. 
• MSCI's gauge of stocks across the globe shed 1.63%, its biggest one-day percentage fall day in about two months, as Wall Street's benchmark S&P 500 sagged 1.7% and the tech-heavy Nasdaq tumbled 2.2%. 
• Worries over Evergrande come as a rally in equities has stalled recently with investors focused on the impact of coronavirus cases on the economy, and when central banks will ease back on monetary stimulus. Given the Evergrande concerns investors moved into safe havens, with U.S. Treasuries gaining in price, and pulling down yields.

(Source: Reuters)

• For the year ended May 31, 2021, Knutsford Express Services Ltd (KEX) reported a net loss of -$95.98Mn (EPS: -$0.19) down from the net profit of $33.56Mn recorded in the previous year. 
• The ongoing pandemic continues to affect passenger travel negatively as a consequence of the continuation of government implemented curfews. Consequently, there was a 38.3% fall in revenues, which along with an impairment loss on goodwill and motor vehicles, resulted in the net loss. 
• The overall impact of the decline in revenues was tempered by a 26.6% reduction in admin and general expenses. Due to the lower operating activities, KEX saw reduced salaries, wages and related expenses, staff training and welfare, travelling, advertising and promotion, fuel, insurance and toll fees. Finance costs also declined on the back of lower interest expense on right-of-use asset and bank charges. 
• With containment measures still in place and new variants of the virus emerging and fueling the need for social distancing and the fear of travelling, we expect revenues to remain depressed possibly resulting in further net losses in the near term. However, as vaccination rates increase, this should facilitate a relaxation of restrictions, greater business activity, higher employment and more confidence around travelling in the medium to long-term. This would also support a gradual rebound in KEX’s operating performance. 
• Knutsford Express’ stock price has declined by 2.9% since the start of the year and closed Thursday’s trading session at a price of $6.50 per share.

(Source: KEX Financials & NCBCM Research)

• Late last week, the Central Bank reported that consumer prices rose by 0.8% month over month (MoM), and 7.9% YoY, in August. Annual inflation was 2 basis point (bp) higher than in July, thus stopping the convergence process projected by the monetary authority. 
• Year to date, accumulated inflation was 5.4%, while 12-month average inflation jumped to 7.3%, its highest level since May 2012. The central bank reiterated that price pressures are mainly due to external shocks associated to food items and oil. In addition, it said that domestic inflation also reflects global supply disruptions, and that such distortions could last until early 2022. 
• Meanwhile, other indicators continue to show that DomRep’s economic recovery keeps taking hold. On the fiscal front, preliminary data through the end of last month show a 41% YoY increase in revenues during the first eight months of the year, leading to an overall surplus of almost 0.2% of GDP (versus a 3.8% deficit in the same period of 2020). 
• Total tourist arrivals reached almost 477,000 in August, more than triple the number a year before and almost the same as in 2019. On a YTD basis, arrivals totaled 2.9Mn, a 79% YoY increase and almost two thirds of the arrivals during the same period of 2019. The government projects that arrivals will total 4.5Mn this year, some three fourths of pre-pandemic levels.

(Source: Oppenheimer)

• The snap election in the Bahamas on Thursday is likely to be the tightest in years, polls show, as Prime Minister Hubert Minnis seeks a second term after the economy suffered its deepest crash since at least 1971. 
• According to a survey by Intel Cay, Minnis’ ruling FNM party entered election day with 40% approval ratings versus 39% for the opposition Progressive Liberal Party. Some 12% of voters remain undecided. The survey of 5,868 people has a margin of error of plus or minus 3%.  
• The high number of undecided voters and razor-thin margins make the race one of the most unpredictable in recent memory, said Queswell Ferguson, one of the founders of Intel Cay, speaking in a phone interview after polls opened. 
• The country was still recovering from the devastation wrought by Hurricane Dorian in 2019 when it saw its vital tourism industry hammered by COVID-19. Amid lockdowns and curfews, the economy shrank 16% in 2020, one of the world’s deepest slumps, and is only expected to recover about 2% this year.  

(Source: Bloomberg)

• Wall Street lost ground on Thursday as unexpectedly robust retail sales data underscored the strength of the U.S. economic recovery, boosting bond yields and prompting a sell-off in market-leading tech stocks. 
• All three major U.S. stock indexes reversed the previous session's rally as rising Treasury yields provided an increasingly attractive alternative to stocks, and the dollar's advance put pressure on U.S. exporters. 
• "We're at a point where sentiment is weighing on the market more than decent data is helping it," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "It's the opposite of the melt-up we saw earlier in the summer." 
• Eight of the 11 major sectors in the S&P 500 were lower, with materials suffering the largest percentage drop. Energy stocks tumbled after crude prices retreated from the previous session's surge as threats to the Gulf of Mexico from Hurricane Nicholas abated.

(Source: Reuters)

• The World Bank Group on Thursday said it ended publication of its "Doing Business" report on country investment climates after a probe of data irregularities cited "undue pressure" by top bank officials, including then-Chief Executive Kristalina Georgieva, to boost China's ranking in 2017.
• The decision came after internal audit reports had raised "ethical matters, including the conduct of former Board officials as well as current and/or former Bank staff and a board investigation conducted by the law firm WilmerHale. 
• The report indicated that Georgieva, now the managing director of the International Monetary Fund, and a key adviser pressured staff to "make specific changes to China's data points" and boost its ranking at a time when the bank was seeking China's support for a big capital increase.

(Source: Fitch Solutions)

• The All-Jamaica Consumer Price Index (CPI) rose by 0.9% for August 2021 contributing to the 12-mth point-to-point inflation rate of 6.1%, which is an increase from the 5.3% reported in July 2021, marginally above the target range. 
• A 1.8% increase in the heavily weighted index for the “Food and Non-Alcoholic Beverages” division as well as increases in the index for the divisions ‘Housing, Water, Electricity, Gas and Other Fuels’ (0.3%), ‘Transport’ (0.4%) and ‘Recreation, Sport and Culture’ (0.6%) contributed to the overall inflation rate. 
• Higher prices for textbooks and stationery materials was the main contributor to the increase in the index for the division ‘Recreation, Sport and Culture’, while higher fuel prices contributed to the rise in the index for the ‘Transport’ division. Additionally, greater electricity rates influenced the increase in the index for ‘Housing, Water, Electricity, Gas and Other Fuels’ division. However, this was tempered by a decline in the index for the group ‘Water Supply and Miscellaneous Services Relating to the Dwelling’. 
• Elevated inflation rate is a common theme globally as countries contend with persistent supply chain challenges and rising demand from the ongoing economic recovery. 
• According to Bank of Jamaica, inflation is projected to average between 5.5% and 6.5% over the next two years, which is higher when compared to an average inflation rate of 5.0% over the past two years, and above the previous projection of 4.8%. The inflation forecast for the next two years anticipates a gradual rise in core inflation, supported by the lagged impact of higher international commodity and shipping prices, a recovery in domestic demand and a temporary increase in inflation expectations. 
• Owing to the elevated inflation level, the BOJ is considering contractionary monetary actions, specifically an increase in its policy rate to partially reduce the impact of borrowing and consumption on prices. Conditional on the gradual tightening of monetary conditions, inflation is projected to remain at 5.0% over the medium term.

(Source: STATIN and BOJ)

• A reduction in direct and operating expenses has fueled a 5.7% YoY increase in Main Event Entertainment Group Ltd.’s net profit for the nine months ended July 31, 2021, to $9.17Mn (EPS: $0.03). 
• Total revenues generated during the 3^rd quarter was the strongest performance since the quarter ended April 2020, owing to good growth in digital signage services. However, year to date, revenues are still down 37.2% relative to the same period last year. MEEG experienced only moderate shifts in business activity following the brief ease in restrictions for the entertainment industry in July, 2021, as such revenues earned from core activity continue to lag significantly behind pre-Covid levels. 
• Although revenues were down, this was outweighed by a 52.3% drop in direct expenses and 29.3% decline in admin and general expenses, which fueled the positive net profit outturn. 
• Given that restrictions to stem the effects of the pandemic will extend through to the final quarter of this financial year, and new variants of the coronavirus continue to emerge, the entertainment sector will continue to be negatively impacted. This will create uncertainty in MEEG’s business model in the near term, and revenue will likely remain depressed. 
• Main Event’s stock price has increased 31.3% since the start of the year and closed Wednesday’s trading session at a price of $4.20 per share. At this price, the stock trades at a P/B ratio of 2.3x earnings, which is below the junior market average of 2.1x.

(Source: MEEG Financials & NCBCM Research)