• Owing to increases in rental and other income, as well as a reduction in finance costs, Kingston Properties Limited reported net profit of US$0.93Mn (EPS: $0.20) for the first half of its financial year to June 2021 from the net loss of US$0.34Mn recorded during the same period in 2020.
• Rental income improved by 59.1% aided by the acquisition of two properties in H2 2020 and one in Q1 2021. A recovery in occupancy at some of the company’s properties in the United States and Cayman Islands, that were affected in 2020 by early lockdown measures in those countries, also contributed to the rebound in rental income.
• A $0.26Mn increase in other income due primarily to fair value gain of $0.20Mn from the Group’s investment in a real estate fund, a drop in net finance costs (US$0.47Mn) due to translation gains on cash balances and higher fee income also supported bottom-line growth.
• The company plans to continue to acquire high yielding assets to grow revenues and returns to shareholders. It will continue the divestment of the Florida condo portfolio and shift into multi-family properties to reduce valuation volatility and generate higher yields. It recently acquired 40% interest in a 155-unit multi-family property in Atlanta, Georgia and is in various stages of completion on three value-added and greenfield transactions in the Cayman Islands and Jamaica. While the pandemic persists, management believes that more distressed assets will become available and the company expects to be in a position to take advantage of those opportunities, especially as interest rates remain fairly low keeping funding costs attractive.
• KPREIT’s stock price has appreciated by 30.2% since the start of the year and closed Monday’s trading session at a price of $9.44 per share. At this price, the stock trades at a P/B ratio of 1.5x earnings, which is above the Main Market Real Estate sector average of 1.0x.

Source: (KPREIT Financials)

• The Costa Rican Legislative Assembly’s approval of a three-year, US$1.8Bn IMF arrangement will bolster public finances and ease political risks in the coming quarters. 
• Fitch Solutions gave Costa Rica a score of 63.8 out of 100 in its Short-Term Political Risk. It ranks fifth out of 17 markets in Latin America. 
• However, as the country’s largest political parties begin campaigning for the February 2022 general election, political risks will likely increase and policymaking will be more difficult as opposition parties distance themselves from President Carlos Alvarado and his centre-left Partido Acción Ciudadana (PAC).

(Source: Fitch Solutions)

• Fitch Solutions has revised down its 2021 growth forecast for Saint Kitts and Nevis (SKN) to 0.5%, from 2.7% previously, as a recent uptick in COVID-19 cases will limit near-term economic activity.
• However, increased vaccination rates in developed markets will help drive inbound tourism to SKN in the quarters ahead, and as a result the agency has revised up its 2022 forecast to 6.0%, from 0.6% previously.
• The continued global spread of COVID-19 poses downside risks to SKN’s recovery as a resurgence of cases would likely slow tourism demand.

(Source: Fitch Solutions)

• In August 2021, Fitch Solutions decided to keep its 2021 global growth forecast unchanged at 5.7%. Real GDP data revealed that growth momentum remained strong in Q2 2021 in large part owing to the significant easing of restrictions in recent months, which led to a significant pickup in activity throughout the first half of the year.
• Despite the acceleration in activity over the second quarter, Fitch continues to monitor two key areas, which could pose downside risks to its global outlook. First, there has been a sharp pick up in the number of infections globally, particularly of the Delta variant, and second, high frequency data are easing already.
• Rising caseloads of the Delta variant pose a downside risk to growth, particularly for countries with low vaccination rates. Initial data suggest that despite a sharp rise in the number of cases, fatality rate remains low in regions such as North America and Europe, where vaccination rates are higher than their emerging market counterparts.
• High frequency data suggest that momentum is starting to ease. It seems that the global PMI (Purchasing Managers Index) may have peaked already, which suggests that incoming data are no longer beating expectations to the degree that they were several weeks ago. While slower growth is to be expected over the coming months as base effects wear off, Fitch notes that shortages and supply chain challenges are also factors behind the weakening of momentum.

(Source: Fitch Solutions)

• U.S. consumers’ expectations for inflation over the medium term rose to an eight-year high in July, according to a Federal Reserve Bank of New York survey. The median survey respondent anticipated an inflation rate of 3.7% in three years’ time, the highest since August 2013 and up from 3.6% in June, the New York Fed said Monday. Expectations for inflation over the next year rose to a record 4.8%.
• Consumers polled by the New York Fed said they expected rents to increase 9.8% in the coming year, the highest reading since the survey began in 2013. Expected changes in medical care costs over the next 12 months ticked up to 9.5%, while the expected change in gas prices moderated to 8.1%.
• Forecasters polled by Bloomberg expect the Labour Department’s monthly report on consumer prices, to be published Wednesday, will show that the annual inflation rate moderated slightly in July after rising to a 13-year high of 5.4% in June.

(Source: Bloomberg)

• Owing to a 20.0% increase in revenues, for the 6-months ending June 2021, tTech Limited reported a 51.0% year over year rise in net profit to $8.62Mn (EPS: $0.15).
• Revenues improved as tTech continued to benefit from the momentum realized in Q1 with the addition of several Cybersecurity related projects to its roster, and the continuation of the Data Protection Service campaign which has strengthened its pipeline. Also contributing positively was the company’s highly successful business technology event, TechCon, that was held virtually this year on May 18‐19.
• The rise in revenues was also sufficient to outweigh the 19.9% and 23.5% expansion in admin expenses and direct costs, respectively.
• tTech has entered the second phase of the Junior Market incentive scheme where 50% of the normal tax rate equivalent to 12.5%, applies to its profits during the second five years of listing on the Junior Market of the Jamaica Stock Exchange. Therefore, tax expenses will begin to adversely impact net income. However, the company is eligible for the Employment Tax Credit which will further reduce the rates payable to 8.75% for the next 5 years and 17.5% thereafter, which will ease the full effects of taxation on its bottom-line.
• tTech’s stock price has appreciated by 2.3% since the start of the year and closed Wednesday’s trading session at a price of $4.40 per share. At this price, the stock trades at a P/E ratio of 18.3x earnings which is below the Junior Market average of 21.0x.

Source: (tTech Financials)    

• Fitch Solutions has made notable upward revisions to many of its real GDP forecasts in Latin America in recent months. Overall, the agency expects the region to grow 5.2%, up from 4.4% previously (-6.7% in 2020), and 3.3% in 2022.
• Growth will continue to be driven by external demand for commodities and economies’ growing resilience to the impact of public health lockdowns. However, a return to pre-pandemic economic activity remains dependent on vaccinations.
• Despite Fitch’s upward revisions, risks remain solidly to the downside due to the spread of variants of COVID-19 and volatile political dynamics.

(Source: Fitch Solutions)

• Fitch Solutions revised down its Panamanian real GDP growth forecast to 11.2% in 2021, from 12.2% previously, to reflect ongoing public health restrictions that will hamper domestic demand. The agency forecasts 5.8% growth in 2022, meaning that real GDP will not recover from the COVID-19 pandemic until 2023. 
• While a steady rebound of industrial activity and strong export growth will make Panama a regional growth outperformer, this largely reflects base effects from a 17.9% contraction in 2020. 
• Fitch highlights downside risks to its short- and long-term growth forecasts due to the potential for future global economic disruptions from the Delta variant and any fiscal adjustments carried out by the Panamanian government in the coming years to weaken public investment. 

(Source: Fitch Solutions)

• Low-income countries have been hard hit by the pandemic. Their large financing needs are only likely to grow as they deal with the crisis and its economic aftermath. The IMF has approved a far-reaching package of support that would expand their access to financial assistance at zero-interest rates, while providing stronger safeguards against taking on debt they cannot handle.
• IMF has provided financial assistance to 50 low-income countries totaling $13 billion in 2020 compared to an average of $2 billion a year pre-pandemic. It also provided $739 million in grant-based debt service relief to 29 of its poorest and most vulnerable members.
• Three-quarters of the new lending came from the Poverty Reduction and Growth Trust (PRGT)–the IMF’s vehicle for zero-interest loans to low-income countries. The lion’s share was in the form of emergency disbursements with limited conditionality.
• Looking ahead, low-income countries will continue to require exceptional levels of external financial support as they recover from the pandemic, and boost investment to build more resilient and inclusive economies.

(Source: IMF and NCBCM Research)

• The U.S. Centers for Disease Control and Prevention (CDC) on Tuesday issued a new 60-day moratorium on residential evictions in areas with high levels of COVID-19 infections citing the raging Delta variant after having rejected an earlier push by the White House.
• The order applies to about 80% of U.S. counties that have substantial or high COVID-19 community transmission rates and covers about 90% of the U.S. population. The CDC said it will expand the protections to additional counties if they see a rise in COVID-19 cases.
• "The emergence of the Delta variant has led to a rapid acceleration of community transmission in the United States, putting more Americans at increased risk, especially if they are unvaccinated," CDC Director Rochelle Walensky said in a statement. "This moratorium is the right thing to do to keep people in their homes and out of congregate settings where COVID-19 spreads."

(Source: Reuters)