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U.S. CDC Says Avoid Traveling On Cruise Ships As COVID-19 Cases Surge Published: 31 December 2021

  • The U.S. Centers for Disease Control and Prevention (CDC) said people should avoid traveling on cruise ships regardless of their vaccination status, as daily COVID-19 cases in the country climb to record highs due to the fast-spreading Omicron variant. 
  • The move delivers another blow to an industry that just started returning to the seas in June after a months-long suspension of voyages caused by the pandemic. 
  • The CDC raised its COVID-19 travel health notice level for cruise ships to four - its highest warning level - from three, citing reports of COVID-19 outbreaks on cruises. 
  • The health agency has investigated or started an investigation into COVID-19 cases on more than 90 ships. "Even fully vaccinated travelers may be at risk for getting and spreading COVID-19 variants," the CDC said on Thursday. 
  • This warning by the CDC is likely to have adverse effects on the Jamaican Tourism Industry in the near term by weighing on visitor arrivals given that the U.S is our major source market for tourists. This also has the ability to lengthen the industry’s recovery time as we seek to return to pre-pandemic levels of tourism activity.

(Sources: Reuters and NCBCM Research)


Bank Of America Predicts An S&P 500 Slump In 2022 — But It Still Believes In These 3 Sectors Published: 31 December 2021

  • If you’re still bullish on the U.S. stock market, you may not want to hear what Bank of America has to say. 
  • The second-largest bank in the U.S. has a forecast of 4,600 for the S&P 500 by the end of 2022. With the benchmark currently hovering around 4,790, that means the bank is pointing to negative returns for the coming year. 
  • “The probability of a 10% correction in the near term or over the next 12 months is elevated,” the bank’s U.S. stock and quantitative strategy chief Savita Subramanian told Bloomberg earlier this month. 
  • At the same time, the Wall Street firm also highlighted three sectors that could outperform in the new year, Energy, Financials, and Healthcare.

(Source: Yahoo Finance)

Minister Bartlett Hails Sandals’ Investment in Jamaica Published: 30 December 2021

  • Minister of Tourism Hon. Edmund Bartlett says Sandals International Resorts’ investment of US$240.0Mn in local projects is proof of the company’s belief and commitment to Jamaica. He noted that Sandals is taking the bold approach in reaffirming its belief in brand Jamaica and the future of the tourism sector. 
  • The company has recently had the official opening of 84 new rooms and suites at the Sandals Royal Caribbean in Montego Bay, St. James, and has more projects in the pipeline. Sandals’ Executive Chairman, Mr. Adam Stewart disclosed that the 2021-22 local projects include next summer’s construction of a brand-new property to replace the demolished Jewel Runaway Bay, the completion of phase one of Sandals Royal Dunn’s River in Ocho Rios, and major expansion at Beaches Negril in Westmoreland. 
  • The tourism sector has been experiencing recovery, as stopover arrivals from January to October 2021 was 1,088,969, this is up approximately 47.0% from the 740,827 for January to October 2020. Minister Bartlett has noted that total visitor arrivals are estimated to reach 4.5Mn, with gross foreign exchange earnings of US$4.7Bn by end 2021. 
  • Sandals’ investment is expected to further support that recovery and is a  signal of its confidence in the sector which has the potential to influence the confidence of other investors. Notwithstanding, the spread of the Omicron variant could weigh on visitor arrivals as travel restrictions are imposed in some countries, thereby negatively impacting the recovery in the sector, at least for the short term.

(Sources: JIS News & NCBCM Research)

Salada Reports Year-End Bottom Line Growth Published: 30 December 2021

  • Owing to an increase in revenue, Salada Foods Jamaica Ltd. reported a 41.9% increase in net profit to an audited $156.83Mn (EPS: $0.15) for the year ended September 30, 2021. 
  • The company was able to grow revenues by 11.4% for the full year which was partly attributable to the successful introduction of new, non-coffee products, namely the Jamaica Mountain Peak Ginger Turmeric Tea, and continued strong export sales. 
  • Lower admin expenses (-7.3%) resulting from lower spending on areas such as audit fees and salaries, and other related costs, also supported the improvement in net profit. 
  • The performance was, however, tempered by an increase in selling and promotional expenses. Selling and promotional spending increased by 18.3% to $52.43M in support of new products and shifting market trends from bottles to sachets. The team was also forced to develop more innovative promotional tactics to gain and/or maintain consumer attention, which was also contributed to increased selling and promotional expenses. 
  • During the year, Salada was faced with numerous obstacles including the deleterious effects of complying with the Jamaica Agricultural Commodities Authority (JACRA) regulations for a 30% locally grown coffee quota, ongoing supply chain disruptions, and increasing freight costs. However, these negative impacts were mitigated by the use of the built-up inventory of raw materials, and lower-cost beans. 
  • Salada Food’s stock price has fallen by 79.1% since the start of the year and closed Wednesday’s trading session at $6.42 per share. At this price, the stock currently trades at a  P/E of 42.8x which is above the main market distribution and manufacturing sector average of 23.4x

(Source: Salada Foods Financials)

How Venezuela Pulled Its Oil Production Out Of A Tailspin Published: 30 December 2021

  • Venezuela this year almost doubled its oil production from last year's decades low as its state-owned company struck deals that let it pump and process more extra-heavy crude into exportable grades. 
  • The surprising reversal began as state-run Petroleos de Venezuela (PDVSA.UL), known as PDVSA, won help from small drilling firms by rolling over old debts and later obtained steady supplies of a key diluent from Iran. The two lifted output to 824,000 barrels per day (bpd) in November, well above the first three-quarters of the year and 90% more than the monthly average a year earlier. 
  • Whether it can continue to ramp up production is unclear. Years of unpaid bills, mismanagement, and, more recently, U.S. sanctions have cut its access to specialized drilling equipment and foreign investment. The sanctions have also limited its customers to firms with no track record of trading.
  • PDVSA's latest gains - including reaching 1 million barrels of daily output for the first time in nearly three years, which Oil Minister Tareck El Aissami described in a Christmas day message as a "great victory" - still fall short of current management's 2021 goal of producing 1.28 million bpd.

 (Source: Reuters)

After Record Year Panama Canal Predicts More In 2022 Published: 30 December 2021

  • The Panama Canal Authority (ACP) said on Monday, December 27 that it expects the container ship, liquefied natural gas (LNG), and liquefied petroleum gas (LPG) segments to boost growth in 2022 after 2021 in which it recorded a record 516.7 million tons transiting the waterway. 
  • "We look forward to accommodating, even more, transits for our customers next year, as container ship, liquefied natural gas, and liquefied petroleum gas transits are expected to drive growth," said Panama Canal Deputy Administrator Ilya Espino de Marotta. 
  • In a public statement, the ACP highlighted that reaching "another record year" this 2021 "was not easy, given the challenges faced by the interoceanic route, from interruptions in the global supply chain to the continued effects of the pandemic on the global economy." 
  • According to data from the Canal Authority traffic through the interoceanic highway "rose between October 1, 2020, and September 30, 2021, driven by the segments of LNG, LPG, container ships, bulk carriers, and vehicle carriers. 
  • In the fiscal year that ended on September 30, the tons and transits of container ships grew by 10.8% and 2%, respectively, relative to the previous fiscal year. At the same time, transits of container ships for LNG grew by 31.4% and 28.2%; and that of LPG by 18.4% and 16.4%, respectively. 
  • By 2022 the canal is expected to contribute 2.497.2Bn dollars, according to the budget approved by Parliament. The Panama Canal is essential to global trade and accounts for almost 10% of Panama’s GDP and so the anticipated expansion of business activities in the waterway should bode well for the government’s coffers and by extension GDP. The Panama Canal, through which 3.5% of world trade that moves by sea passes, connects more than 140 maritime routes and 1,700 ports in 160 countries.


(Source: Newsroom Panama)

U.S. Goods Trade Gap Hits Record; Pending Home Sales Slip Published: 30 December 2021

  • The U.S. trade deficit in goods mushroomed to the widest ever in November as imports of consumer goods shot to a record ahead of the second straight COVID-distorted holiday shopping season along with industrial supplies, while exports slipped after a historic gain a month earlier.
  • The goods trade gap reported Wednesday by the Commerce Department is likely to remain historically high as long as the coronavirus pandemic continues, economists said. 
  • The emergence of the fast-spreading Omicron variant of COVID-19 that has driven U.S. and global caseloads to a record this week may exacerbate it further in the near term if it limits American consumers' spending on services. 
  • Omicron also stands as a downside risk in the housing market. A reading of pending home sales also out Wednesday showed an unexpected drop in November, and while that data largely predated Omicron's ascendance in the United States, the highly contagious new variant could further limit home sales in the near term.

(Source: Reuters)

World Economy To Top $100 Trillion In 2022 For The First Time Published: 30 December 2021

  • The world's economic output will exceed $100 trillion for the first time next year and it will take China a little longer than previously thought to overtake the United States as the Number 1 economy, a report showed on Sunday. 
  • British consultancy, Cebr, predicted China will become the world's top economy in dollar terms in 2030, two years later than forecast in last year's World Economic League Table report. 
  • India looks set to overtake France next year and then Britain in 2023 to regain its place as the world's sixth-biggest economy, Cebr said. 
  • "The important issue for the 2020s is how the world economies cope with inflation, which has now reached 6.8% in the U.S.," said Cebr deputy chairman Douglas McWilliams.


Fontana Limited Raises J$500.0Mn In Capital Published: 29 December 2021

  • Scotia Investments Jamaica Limited acted as Lead Arranger and Broker to successfully raise J$500.0Mn of debt capital by way of a private placement of bonds for Fontana Limited. The proceeds of the offer will support Fontana’s continued growth which includes plans to develop a warehouse and distribution center in Kingston, as well as a new store in Portmore. 
  • The transaction was executed at a time when BOJ policy rates were increased for the first time in 13 years. The Ministry of Finance and Planning had also recently reopened Government of Jamaica long-term bonds that were taken up at yields that indicated that the long-term rates in the Jamaican Dollar debt space were increasing. 
  • In light of the changing market conditions, the arrangers pursued a fixed to variable rate bond structure. This financing strategy provides Fontana with a competitive rate in the short term and the potential to lower the rate in the future if market rates reduce in the longer term. 
  • According to its Annual Report, 2021 has been Fontana’s most successful year to date. Revenues were up $5.2Bn, a 14.2% increase over the $4.5Bn of the previous year (2020) with sales growth outpacing that of the overall Jamaican retail sector. The company also grew its profits by 85% year over year, which helped to bolster its success in securing the debt capital required to seize the opportunities for expansion in Portmore and Kingston.

(Source: JSE News)

Government to Proceed with Compensation Review Published: 29 December 2021

  • Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke has said that the Government is looking to proceed with the Public Sector Compensation Review in 2021. The review is intended to overhaul the structure of salaries and other emoluments in the public service to make it more equitable. 
  • Implementation is expected to begin in April, and Dr. Clarke noted that the impending review is an ambitious reform and a once-in-a-generation opportunity to undertake an exercise of its magnitude. 
  • Thirty-one bargaining units representing some 80,000 public sector employees, or approximately 80.0% of the workforce, have accepted the Government’s offer and it is anticipated that the number for the others will substantially increase shortly. As a result, the government’s attention will turn to put in place the steps that can allow for the beginning of the implementation of the compensation review. 
  • Successful completion of this compensation review will lead to higher salaries for some positions, thereby improving disposable income for workers as the government strives for more equitable salaries.

(Source: JIS News)