• Finance Minister Colm Imbert has rejected claims published in certain sections of the media that the government has received a caution from the International Monetary Fund (IMF) on the distribution of foreign exchange (forex).
• In a November 10 statement, Imbert addressed public concerns about difficulties accessing foreign exchange, the government's decision to let the Trinidad and Tobago dollar float in line with IMF advice, and calls for direct government involvement in forex distribution. He also clarified that the decision to reopen a forex window at EximBank for essential imports followed pressure from the business community and a daily newspaper.
• He noted that the recommendation did not appear for the first time in the 2024 IMF Article IV report, as alleged in a daily newspaper report on November 10.
• At a November 5 news conference, Imbert stated that the ministry was in discussions with various chambers of commerce and the Trinidad and Tobago Manufacturers Association (TTMA) about potential changes to the forex distribution system. He explained that the Central Bank relies on an "honour system" when allocating US currency to local commercial banks, which in turn distribute it to customers.
• An alternative would be to allocate specific percentages of this distribution for SMEs (small and medium enterprises), as well as for medical expenses, education, travel, or imports needed by manufacturers.
• In a notice released on November 8, RBC announced a 66% reduction in the forex limits on its personal and business credit cards, effective December 1. Similarly, Republic Bank informed customers last September of changes that took effect that month, including a reduction in the US-dollar limit on its credit cards from US$10,000 to US$5,000 per cycle.

(Source: Trinidad & Tobago Newsday)

• European banks face an even tougher task to close an earnings gap on U.S. rivals, as Wall Street awaits a new era of financial deregulation under a second Donald Trump presidency. Lenders in the euro zone and Britain have been hobbled by poor profitability and weak economies since the 2008-09 global financial crisis, while U.S. banks have soared in value and stolen market share, especially in investment banking as European rivals retreated.
• Some banks had begun to claw back lost ground this year though. Until this week, European shares were outperforming U.S. peers, and hopes had grown that the U.S. would adopt some elements of the Basel III regulations requiring American banks to hold more capital, helping level the playing field.
• The U.S. banking industry is expecting Trump to usher in Republican regulators who ease capital rules and merger approvals and further dilute the contentious Basel III endgame proposal aimed at requiring big lenders to hold more capital. The pace of any deregulation will be determined by new regulators and key policymakers that Trump has yet to nominate, leaving the outlook highly uncertain.
• "We can also expect an uptick in regional bank mergers. Comparatively, European banks with their more restrictive regulatory oversight will be competing with one hand tied behind their backs." The long-anticipated wave of European banking mergers and acquisitions has resumed this year, marked by UniCredit's potential takeover of Commerzbank and Banco Bilbao Vizcaya Argentaria’s (BBVA’s) bid for Sabadell. However, neither deal is assured, as both face political challenges.
• According to Filippo Maria Alloatti, Head of Financials Credit at Federated Hermes, U.S. banks would likely be the main beneficiaries under Trump’s policies. Nevertheless, international banks with significant U.S. operations, such as Barclays, Deutsche Bank, and Union Bank of Switzerland (UBS), are also expected to experience "positive impacts."

(Source: Reuters)

• China's consumer prices rose at the slowest pace in four months in October, while producer price deflation deepened, even as Beijing doubled down on stimulus to support the sputtering economy.
• In its latest stimulus measures, the country's top legislative body approved a 10 trillion yuan ($1.4 trillion) package on Friday to ease local government "hidden debt" burdens rather than directly injecting money, as some investors had hoped. Analysts say the package will likely do little to boost economic activity, demand, and prices in the near term.
• The consumer price index (CPI) rose 0.3% from a year earlier last month, slowing from September's 0.4% rise and marking the lowest since June, data from the National Bureau of Statistics showed, short of the 0.4% increase forecast in a Reuters poll of economists.
• The highly anticipated stimulus plan passed on Friday by the standing committee of the National People's Congress may leave investors who speculated on a fiscal bazooka disappointed, as it fell short of expectations for strong policy steps to boost consumption and reflate the economy.
• Finance Minister Lan Foan indicated on Friday that more stimulus was coming, telling a press conference that tax policies to support the housing market would come soon and that the authorities were accelerating the work of recapitalising banks.

(Source: Reuters)

• After a weak first quarter, Lasco Distributors Limited (LASD) experienced a modest 4.1% growth in profits for Q2 2024 to $359.28Mn aided by topline growth and higher other income. However, subdued earnings in Q1 2024 meant that earnings were down for the first six months of the year. The overall performance was weighed down by higher operating expenses. 
• In Q2 2024, LASD saw a turnaround in earnings, supported by a 5.7% rise in revenues to $7.64Bn. This growth was fueled by robust gains in its export business (+25%) and pharmaceutical segment (+14%).
• However, this did not translate to its year-on-year performance. Increased costs related to sales and promotions, employee expenses, technology upgrades, and depreciation pushed operating expenses higher. Additionally, financing costs surged by 563.4%, further weakening its performance. Q1 results were particularly affected by supply disruptions, which limited product availability and caused a 19.1% decline in net profit.
• As a result, LASD reported lower net profits of $718.18Mn (-9.4%) for its H1 2024 reporting period.
• However, in the short term, the company plans to implement contingency measures to improve inventory levels, while mitigating the effects of supply challenges to meet demand. These actions, combined with disciplined cost management may drive future topline growth and improve profitability. LASD also remains committed to its investment and growth strategies, emphasising portfolio innovation, expanded capabilities, and stronger consumer communication and engagement.
• LASD’s stock price has appreciated by 20.9% since the start of the year closing Thursday’s trading session at $4.56. Currently, the stock trades at a P/E ratio of 11.68x, below the Main Market Manufacturing and Distribution Sector average of 13.51x.

(Source: JSE & NCBCM Research)

• The Government of Jamaica has begun assessing the damage caused by Tropical Storm Rafael, which impacted Jamaica between November 4 and 5.
• Prime Minister, Dr. the Most Hon. Andrew Holness, said preliminary figures indicate that the damage could range between $500Mn and $1Bn. “Our figures are preliminary; by the end of the day, we will have more refined figures to share with the public,” Dr Holness said, addressing Wednesday’s (November 6) post-Cabinet press briefing at Jamaica House.
• The Prime Minister noted that Jamaica has a multi-layered disaster risk response mechanism, which has placed the country in a position to fund the needed repairs.
• Meanwhile, Minister without Portfolio in the Ministry of Economic Growth and Job Creation with Responsibility for Works, Hon. Robert Morgan, in reporting on the storm’s impact, noted that there were 15 blocked roads, 10 flooded roads, minor damage to two roads, seven roads with single lane access and two roads that were impassable.
• He shared that the National Works Agency (NWA) has commenced providing access to blocked roads by way of single-lane traffic, adding that the next step will be to fully clear the blockages.

(Source: JIS)

• The recent surge in the Brazilian real and ongoing uncertainties about inflation and the global economy prompted Brazil's Central Bank to accelerate interest rate hikes. The Monetary Policy Committee (Copom) unanimously raised the Special System for Settlement and Custody (Selic) rate, the country's benchmark interest rate, by 50 basis points to 11.25%. This marks the second consecutive rate hike, following a 25 basis points increase in September 2024.
• While not directly referencing the election of former president Donald Trump, the Central Bank noted heightened uncertainty in the United States. "The uncertain economic outlook in the U.S., which casts more doubt on the pace of economic slowdown, disinflation, and, consequently, the Federal Reserve's monetary policy stance."
• Regarding the domestic scenario, the committee said it was monitoring fiscal policy and called for adjustments in public spending. “The Committee reaffirms that a credible fiscal policy committed to debt sustainability, supported by the presentation and implementation of structural measures for the fiscal budget, will contribute to anchoring inflation expectations and reducing risk premiums for financial assets, consequently impacting monetary policy,” the statement said.
• The Selic rate is the Central Bank's primary tool for controlling official inflation, as measured by the Broad National Consumer Price Index (IPCA). In September, the IPCA rose to 0.44%, bringing the 12-month accumulated inflation to 4.42%, edging closer to this year's upper target limit. For 2024, the National Monetary Council (CMN) has set an inflation target of 1.5%-4.5%.
• The Copom statement included the Central Bank's revised inflation outlook, forecasting the IPCA to reach 4.6% in 2024, surpassing the target ceiling, followed by 3.9% in 2025, and 3.6% for the 12 months ending in the first quarter of 2026. These projections are based on the Central Bank's "extended horizon," which evaluates inflation over an 18-month period.

(Source: Agência Brasil)

• Mining Ventures Corporation, a Canadian mining company, is aiming to produce 350,000 ounces of gold annually when its US$1.5 Billion Oko West Project begins operation in Guyana in 2027. The company, which has operations in Brazil, unveiled the Oko West Project during an education forum on Wednesday 
• According to Guyana’s Country Manager for G-Mining Ventures, Bjorn Jeune, the Oko West Project, which is located in Region Seven, represents a significant milestone in the country’s natural resource development. 
• “With a projected mine life of 13 years, we anticipate the production of over 350,000 ounces of gold annually. The ripple effect of which will be the creation of at least 1,500 jobs, with a strong focus on local employment and capacity-building,” Jeune said.
• The project includes both open pit and underground mining. The company is currently transitioning to mine development, and construction of the mine site is estimated to begin in the second quarter of 2025.
• Jeune said the company is also working closely with Government agencies to ensure the successful implementation of the gold mining project, which is expected to boost the economy. He assured that the Oko West Project will offer employment opportunities to many of the trainees, thereby enhancing the local workforce.

(Source: Loop Caribbean News)

• The Federal Reserve approved its second consecutive interest rate cut Thursday, moving at a less aggressive pace than before but continuing its efforts to right-size monetary policy.
• In a follow-up to September’s big half percentage point reduction, the Federal Open Market Committee lowered its benchmark overnight borrowing rate by a quarter percentage point, or 25 basis points, to a target range of 4.50%-4.75%. The rate sets what banks charge each other for overnight lending, but often influences consumer debt instruments such as mortgages, credit cards and auto loans.
• Markets had widely expected the move, which was telegraphed both at the September meeting and in follow-up remarks from policymakers since then. The vote was unanimous, unlike the previous move that saw the first “no” vote from a Fed governor since 2005. This time, Governor Michelle Bowman went along with the decision.
• However, the post-meeting statement reflected a few tweaks in how the Fed views the economy. Among them was an altered view in how it assesses the effort to bring down inflation, while supporting the labor market. “The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance,” the document said, a change from September when it noted “greater confidence” in the process.
• Fed officials have justified the easing mode for policy as they view supporting employment becoming at least as much of a priority as arresting inflation.
• The statement slightly downgraded the labor market, saying “conditions have generally eased, and the unemployment rate has moved up but remains low.” The committee again said the economy “has continued to expand at a solid pace.

(Source: Reuters)

• Policymakers began taking stock of what could become a more complex economic landscape when President-elect Donald Trump takes office next year.
• Fed Chair Jerome Powell said the results of Tuesday's presidential election, which paved the way for a U.S. chief executive who has pledged widespread deportation of immigrants, broad-based tariffs, and tax cuts, would have no "near-term" impact on U.S. monetary policy.
• Powell said the Fed will continue assessing data to determine the "pace and destination" of interest rates as officials reset currently tight monetary policy to account for inflation that has slowed markedly in the past year and is nearing the U.S. central bank's 2% target.
• But as the new administration's proposals take shape, the Fed chief said the central bank would begin estimating the impact on its twin goals of stable inflation and maximum employment.
• Inflation has since fallen and Fed policy rates are coming down as well, a process Powell said is still expected to lead over time to a more neutral rate of interest that neither stimulates nor restrains the economy.
• Yet the exact destination remains unknown and may become even harder to pin down if fiscal and tax policies change as rapidly as Trump has pledged, particularly given the political tailwind of Republican control of the U.S. Senate and possibly the House of Representatives.

(Source: Reuters)

• Buoyed by improvement in direct and finance costs, OMNI Industries Limited (OMNI) profits jumped by 57.5% during Q3 2024. This allowed the company to report earnings of $145.92Mn (+13.1%) for the nine months ended September 30, 2024.
• During the period, OMNI’s cost of goods sales (COGS) declined by 19.1% to J$795.01Mn, aided by lower demurrage costs^[1] and a reduction in financing costs given the company’s proactive debt reduction efforts, which resulted in lower interest expenses for the period.
• However, the outturn was tempered by higher operating expenses (+32.5%) due to higher professional fees, marketing, and other expenses related to the companies’ initial public offer (IPO) on June 11, 2024.  While most of these were one-off expenses, and should not affect the company in subsequent quarters, the company did face higher haulage, factory, and export‐related costs, which also contributed to the increase in operating expenses.
• Furthermore, dampened by adverse weather conditions, including Hurricane Beryl, total revenue fell by J$60.19Mn or 3.8% year to date (YTD). Of note, construction supplies remain the primary revenue driver for the company, accounting for 53% of total revenue; as such, the cement shortage on the Island, which affected the construction industry, contributed to depressed top-line growth.
• That said, the dip in revenues and higher operating expenses were not enough to disrupt the company’s performance.
• Since the start of the year, OMNI has successfully achieved several key objectives, including listing on the Junior Market of the Jamaica Stock Exchange (JSE); reducing outstanding debt through prepayments, commissioning a Moulding Machine in September 2024 while advancing the acquisition of additional high‐efficiency equipment, and expanding product offerings by leveraging its new equipment capabilities.
• Looking ahead, these strategic shifts and acquisitions should allow the company to manage financing costs while further augmenting its capabilities to allow greater production, which should fuel topline growth and overall earnings.
• OMNI’s stock price has risen by 8.0% since listing on the JSE. The stock closed Wednesday’s trading session at $1.08, with a P/E ratio of 16.09x, lower than the Junior Market Distribution Sector average (excluding outliers)^[2] of 20.45x.

(Sources: JSE & NCBCM Research)

^[1] Demurrage is a fee that must be paid when cargo remains at a port or terminal for longer than the agreed free time period specified in a shipping contract

^[2] The outliers are Derrimon, RPL, Fosrich, PTL, CAC, and Jetcon,