• The global spread of Covid-19 will undermine short-term tourism in Saint Kitts and Nevis (SKN) and cause significant contractions in exports and private consumption.
• Fitch Solutions has revised down its 2020 growth forecast for SKN to -11.5% y-o-y, from -4.5%, as the economy has remained closed to foreign tourists.
• A second wave of infections globally in Q4 2020 poses downside risks to their forecast, as SKN would likely extend its border closure.

(Source: Fitch Solutions)

• OPEC and its allies will restore some oil supplies next month, but the impact will be “barely felt” as demand recovers from the coronavirus crisis, said Saudi Arabia’s Energy Minister.
• After almost three months of historic output curbs to offset the global pandemic's worst effects, the 23-nation coalition led by Riyadh and Moscow will proceed with its plan to taper the reductions gradually. The decision was widely expected but still carries some risks for the cartel after a resurgence of the virus in the U.S., the world's largest oil consumer.
• The Organization of Petroleum Exporting Countries and its allies will withhold 7.7 million barrels a day from the market in August, compared with cuts of 9.6 million currently. The group’s two largest members, Russia and Saudi Arabia, publicly backed the move, and other ministers participating in the video conference had agreed in principle, delegates said.

(Source: Bloomberg)

• Global debt surged to a record $258Tn in the first quarter of 2020 as economies around the world shut down to contain the coronavirus pandemic, and debt levels are continuing to rise, according to the Institute for International Finance (IIF).
• The IIF, which represents global banks and financial institutions, said the first-quarter debt-to-GDP ratio jumped by over 10 percentage points, the largest quarterly surge on record, to reach a record 331%.
• Overall, gross debt issuance hit an “eye-watering” record of $12.5Tn in the second quarter, compared with a quarterly average of $5.5Tn in 2019, the IIF said. It noted that 60% of those issues came from governments.

(Source: Reuters)

• Despite a 13.4% (or $295.80Mn) increase in revenues, Lasco Financial Services Limited reported an audited net loss of $56.92Mn (EPS: -4.49¢) for the year ended March 31, 2020. This represents an almost five-fold decline from the $281.76Mn (EPS: 22.28¢) net profit made in the prior year.
• A 56.1% (or $429.20Mn) increase in selling and promotion expenses, a 22.9% (or $201.73Mn) rise in administrative expenses, as well as a 23.4% (or $39.55Mn) increase in finance costs drove this performance.
• The stock price has fallen 42.6% since the start of the year, closing Wednesday’s trading session at $2.49. At this price, LASF trades at a P/B of 2.04x, which is below the Junior Market Financial Sector Average of 2.57x.

(Source: LASF Financials)

• For the year ended March 31, 2020, 1834 Investments Limited reported audited net profit of $40.59Mn (EPS: 3.35¢), up by $35.04Mn, relative to the $5.55Mn reported in 2019.
• This improvement was driven by a 73.4% (or $40.44Mn) increase in total revenues and $36.65Mn rise in share of profit from associates, which outstripped the 38.1% (or $17.54Mn) increase in other operating expenses and a 19.4% (or $4.74Mn) rise in administrative expenses.
• This improvement in the bottom line was also supported by no fair value loss on investment properties for the reporting period, which represents an improvement from the $31.41Mn loss reported in the prior year.
• The stock price has fallen 5.6% since the start of the year. 1834 Investments closed Wednesday’s trading session at $1.01 and is currently trading at a P/E of 30.1x, which is well above the Main Market Financial Sector Average of 15.0x.

(Source: 1834 Investments Financials)

• Fitch Solutions forecasted that Panama’s fiscal deficit will widen to 6.9% of GDP, an all-time high, in 2020 due to collapsing revenues and countercyclical government spending increases. This is a revision from its previous forecast of a 5.2% shortfall.
• Despite holding a legislative majority, President Laurentino ‘Nito’ Cortizo will face significant headwinds in the coming years as he tries to return the country to fiscal consolidation.
• That said, sustained demand for Panamanian debt will likely contain borrowing costs in the coming years, even as wider deficits push government debt higher.

(Source: Fitch Solutions)

• Economic activity in the Dominican Republic will contract for the first time in decades in 2020 as the coronavirus pandemic drives a decline in private consumption. Weak global demand for Dominican goods and services will persist despite a reopening of the country’s borders.
• The Dominican government’s fiscal stimulus will provide limited economic support while president-elect Luis Abinader upholds the investor-friendly policies of his predecessor to bolster growth.
• Fitch Solutions maintain its forecast for real GDP to decline 4.7% y-o-y in 2020, though they highlight downside risks presented by an uptick in active Covid-19 cases.

(Source: Fitch Solutions)

• China’s economy grew 3.2% in the second quarter of 2020, relative to the same period in 2019, recovering from a record contraction as lockdown measures ended and policymakers stepped up stimulus to combat the shock from the coronavirus crisis.
• The growth was faster than the 2.5% forecast by analysts in a Reuters poll, and followed a steep 6.8% slump in the first quarter, the first such contraction since at least 1992 when quarterly gross domestic product (GDP) records began.
• On a quarter-on-quarter basis, GDP rose 11.5% in April-June, the bureau said, compared with expectations for a 9.6% rise and a 10% decline in the previous quarter.

(Source: Reuters)

• As countries across Asia Pacific struggle with resurgences of the coronavirus, one data point is steering government responses: the share of cases with no clear indication of how infection occurred.
• These patients cannot be linked to other confirmed infections or existing outbreaks by virus responders, indicating hidden chains of transmission. A growing proportion of such cases in a city’s resurgence pushes governments, like in Australia and Hong Kong, to take broad and blunt action, returning entire cities to lockdown-like conditions.
• This data point is a telltale sign of whether resurgences across the world will flare up into bigger waves, and if residents need to gird themselves for a return to lockdown.
• The Asian financial hub enjoyed three months of normal life before a surprise resurgence this month that looks to set to be its worst wave ever. Infections of “unknown origins” have surged to half of all new local cases, indicating that they are emerging from all corners.

(Source: Bloomberg)

• According to Fitch, Jamaica’s current account deficit will increase to 6.7% of GDP in 2020, from 2.1% in 2019, before narrowing modestly to 5.0% of GDP in 2021. Tourism accounts for the majority of Jamaica’s services trade surplus, which was equivalent to 10.7% of GDP in 2019.
• While Jamaica reopened to foreign travel on June 15, Fitch expects that activity in the sector will remain weak through H220. The continued global spread of Covid-19 and stringent protocols on foreign travel in Jamaica, including randomized testing upon arrival, will limit tourism demand.
• Falling remittances and goods exports will also contribute to the widening of Jamaica’s current account deficit. In April 2020, remittances contracted by 9.8% y-o-y, and this trend is expected to continue as unemployment in the US remains high and the continued spread of Covid-19 forces additional lockdowns.
• The coronavirus has also disrupted mining operations and undermined demand for Jamaica’s main goods export, bauxite. Bauxite, which is mined for its aluminum content, accounted for 62.7% of Jamaica’s total goods exports in 2019. However, the temporary closure of Jiuquan Iron and Steel Company's Alpart plant pushed down bauxite exports by 21.0% y-o-y in March 2020, which Fitch expects to continue as global economic activity remains weak. The forecast is that Jamaica’s goods trade deficit will swell to 26.6% of GDP in 2020.

(Source: Fitch Solutions)