• 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)

• Eleven markets in Latin America will be publishing CPI prints this week, including Chile, Colombia, and Mexico. Base effects, due to the collapse in prices in Q2 2020, will be the primary driver of higher prices in April, though currency weakness, rising energy prices, and supply chain bottlenecks will likely contribute as well.
• Fitch Solutions expects that regional central banks will pay close attention to the rate of inflation acceleration in the next several CPI prints as they consider whether to tighten monetary policy in 2021. In Q1 2021, several major markets saw inflation rise past the mid-point of their central banks’ target range.
• Latin American central banks began aggressively loosening monetary policy in Q2 2020 in order to support credit growth as the region suffered the worst contraction in the global economy. Fitch Solutions does not forecast that any major central banks, outside of Brazil, will enact rate hikes in 2021. However, should inflation accelerate significantly in the months ahead, policymakers would likely be forced to tighten monetary policy, potentially leading to a slower economic recovery than current forecasts.
• In addition, Fitch Solutions has previously highlighted how rising bond yields in the US are eroding the relative attractiveness of Latin American assets. An increase in inflation in the region could exacerbate this trend, causing investors to demand even higher yields as rising prices erode the value of fixed returns. Higher borrowing costs would, in turn, weigh on investment and reduce regional governments' fiscal flexibility.

(Source: Fitch Solutions)

• Colombia's peso, public debt, and stocks depreciated on Monday after President Ivan Duque withdrew a tax reform proposal seen as important for the country's fiscal stability, sparking market uncertainty and comment from rating agency Moody's.
• Duque withdrew the proposal on Sunday after staunch opposition from lawmakers and deadly street protests, but he said tax reform is still necessary and that a new proposal will be made with consensus among business leaders, political parties, and civil society. 
• The withdrawn proposal, originally intended to raise more than $6 billion in revenue, would have increased taxes paid by individuals and businesses, expanded sales taxes, and eliminated exemptions and deductions.
• The Colombian currency fell 1.4% to a six-month low of 3,804.95 pesos per dollar. Since the tax proposal was sent to Congress on April 15, the peso has depreciated 5.3%. Considering the withdrawal of the proposal, the cessation of the social unrest will likely influence some positive movement in the currency.
• However, the government will have to find alternative solutions to provide funding to finance its operations and pay down its debt.

(Source: Reuters & NCBCM Research

• The U.S. economy is poised to grow at the fastest rate in decades this year as it rebounds from the crisis caused by the coronavirus pandemic, but financial conditions are nowhere near the level where the Federal Reserve would consider pulling back its support, New York Fed Bank President John Williams said on Monday.
• U.S gross domestic product could increase by around 7% this year after adjusting for inflation, bringing in the fastest growth since the early 1980s, Williams said. But that boom may not be enough to achieve the Fed's dual mandate for inflation and maximum employment, Williams said.
• "It's clear there is a big shift in the economy, and the outlook has improved," Williams said during a virtual event. "But let me emphasize that the data and conditions we are seeing now are not nearly enough for the FOMC to shift its monetary policy stance."
• Fed officials agreed last week to keep interest rates near zero and to continue purchasing $120 billion a month in bonds until there is "substantial further progress" toward the Fed's goals for maximum employment and inflation.
• The labor market is still short about 8.5 million jobs compared to pre-pandemic, and the job losses fell hardest on service sector workers and Black and Hispanic workers, he said. "This means we will need big job numbers for some time to fully get the country back to work," Williams said. While inflation may rise in the near term as prices rebound from the low levels of last spring, it is likely to come back down to about 2% next year, Williams added.

(Source: Reuters)

• Oil prices settled higher Monday, supported by renewed bets on a recovery in energy demand as the U.S. reopening picks up speed ahead of the summer driving season.
• On the New York Mercantile Exchange, crude futures for June delivery rose 1.43% to settle at $64.49 a barrel, while on London's Intercontinental Exchange, Brent rose 1.22% to trade at $67.58 a barrel.
• "Crude oil prices rallied as signs of further strength in demand continue to emerge. The emergence of several US cities from lockdown is stoking confidence of stronger demand in gasoline ahead of the key US summer driving season," ANZ Research said in a note.
• The renewed optimism ahead of the summer driving season, a period in which gasoline demand is typically at its seasonal peak, is helping to offset concerns over a strong record of daily Covid-19 infections in India, the third latest oil-consuming country.
• The upbeat start to the month for U.S. oil prices comes after a 13% rally last month despite lingering concerns over the increase in Iranian production. Over the weekend, Iran said it expects to export as much as 2.5 million barrels of oil should nuclear deal talks with the U.S. and other nations lead to the removal of restrictions against the Islamic Republic.

(Source: Investing.com