• Consumer prices rose 0.8% in July 2024, with the All Jamaica Consumer Price Index (CPI) rising from 136.4 in June to 137.5 in July.
• This upward adjustment was primarily driven by a 1.9% increase in the heavily weighted index for the division ‘Food and Non-Alcoholic Beverages’. There was a 7.4% rise in the index for ‘Vegetables, tubers, plantains, cooking bananas and pulses’ largely stemming from higher prices for some agricultural produce, chiefly vegetables, in the aftermath of Hurricane Beryl.
• Also contributing to the upward movement in the CPI for July was a 0.4% rise in the index for ‘Transport’ division due to higher petrol prices and increased toll rates for the East-West leg of Highway 2000.
• Despite higher consumer prices during the month, the point-to-point inflation rate for the All Jamaica Consumer Price Index from July 2023 to July 2024 was 5.1%. This was 0.3 percentage points lower than the 5.4% recorded for June 2023 to June 2024. The divisions making the largest contribution to the point-to-point inflation rate were "Transport" (11.5%), "Food and Non-Alcoholic Beverages" (3.5%), and "Housing, Water, Electricity, Gas and Other Fuels" (5.0%).
• The reduction in point to point inflation was largely stemming from the slowdown in the rate of increase in the "Food and Non-Alcoholic Beverages", and "Housing, Water, Electricity, Gas and Other Fuels", declining from 4.0% to 3.5% and 5.9% to 5.0%, respectively.
• At its last monetary policy meeting in June, the BOJ kept its policy rate at 7.00 and agreed to start a gradual easing of its monetary policy stance. Inflation is projected to remain generally within the 4-6% target range over the next two years, with minor deviations in 2025 due to potential fluctuations in agricultural prices. As such, BOJ will continue to monitor these price movements to guide its decisions on policy rate adjustments and other monetary policy actions in the future. The next policy decision will be on the 20th of August.

(Sources: STATIN & NCBCM Research)

• Buoyed by solid revenue growth, Honey Bun reported net profit of $ 240.99Mn for its 9 months ending June 30, 2024, a 19.3% increase year on year.
• Revenue grew 12.9% (or $331.03Mn) YTD to $2.89Bn due to stronger sales. There was also a 7.6% rise in direct costs; however, with revenue growth outpacing direct costs gross margin expanded by 2.7 percentage points to 46.4%.
• Operating Expenses grew by 20.5% (or $175.65Mn) to $1.03Bn. Despite cost pressures, Honey Bun’s operating profit increased by 15.7%, as the rise in revenues outweighed the administrative (+19.7% or $94.87Mn) and selling and distribution (21.5% or $80.79Mn) expenses, supporting growth in its bottom-line.
• Honey Bun has embarked into a new market segment, with the purchase of the retail pastry shop “Swirls” on June 1, 2024. With this acquisition, the Company plans to enhance its product portfolio, offering a wider variety of baked goods and meals to meet the growing consumer demand.
• The company is continuing its growth and expansion strategy with the development of its new production facility in Angels, St. Catherine, which is expected to more than double its manufacturing capacity. The new facility will be between two major highways, giving Honey Bun greater access to markets outside the Kinston and St. Andrew metropolitan area. Overall, as the company continues to expand, it is expected to generate additional revenue, which should aid in sustaining long-term growth and may lead to enhanced earnings performance.
• Reflecting its strong financial performance and investors’ expectations for continued growth in earnings given the recent acquisition and its other expansion plans, Honey Bun’s stock price has increased by 27.5% since the start of the calendar year. The stock closed Thursday’s trading session at $8.16 and currently trades at a P/E of 15.7x earnings, which is below the Junior Market Manufacturing Sector Average of 22.3x.

(Sources: JSE and NCBCM Research)

• Fitch Solutions has substantially revised upward its growth forecasts for the Dominican Republic for 2024 from 3.8% to 4.6% and for 2025 from 3.5% to 5.1%. The forecasts are in line with Focus Economics consensus for 2024 (4.6%) and marginally more upbeat in 2025 (4.6%).
• While Fitch’s expectations for aggregate household income growth have modestly improved, the revisions are underpinned by a more upbeat view of investment growth in the coming quarters as well as an improving growth outlook for the US economy.
• Fitch forecast that the Dominican fiscal deficit will stabilise at 3.4% of GDP in 2024 (2.7% previously) and 2025, which, in conjunction with strong economic growth, will contain the overall debt load at 45.2% of GDP by 2025.
• In 2024, economic resilience will drive tax revenue growth, balancing against increased capital and payroll spending, but in 2025, proposed tax cuts pose risks to revenue growth and could cause President Luis Abinader to temper expected spending increases.
• After winning supermajorities in both chambers of Congress, President Luis Abinader of the Modern Revolution Party will embark on a sweeping reform drive, including reforms to the constitution, social security, labour and fiscal policy. Given his large majorities in Congress, Fitch believes that Abinader will be able to institute his agenda more or less fully, although the possibility exists that some minor concessions will be made to retain the support of allied parties.
• While the full text of the reform proposals will not be presented to Congress until mid-August, based on public statements, Fitch remains fairly optimistic that the changes will be conducive to economic growth and improved fiscal policy guardrails.

(Source: Fitch Solutions)

• The Caribbean Biodiversity Fund (CBF) has recently launched its inaugural Call for Proposals for the Advancing Circular Economy (ACE) Facility, where residents from various Caribbean countries are eligible to apply.
• This program aims to provide grants totalling US$24.7Mn to innovative projects that promote circular economy principles and address the pressing issue of marine litter to combat marine pollution and safeguard biodiversity in the Caribbean region.
• Recognising the significant impact of marine pollution on Caribbean ecosystems and the bio-economy, the CBF has committed to advancing sustainable solutions in the region through the ACE Facility, which is part of its Nature-Based Economies Program.
• The ACE Facility aims to support projects that implement practical circular economy principles to prevent waste from entering the marine environment and to remove marine litter, while also considering post-waste removal processes such as recycling, reuse, and refurbishing for proper waste disposal.
• Funding for the ACE Facility is provided by the KfW Development Bank (KfW) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). Grants ranging from US$400,000 to US$2Mn per project are available and can be implemented over two and a half to three years.
• The eligible countries for funding include Cuba, Dominican Republic, Dominica, Grenada, Haiti, Jamaica, Montserrat, Saint Lucia, and Saint Vincent and the Grenadines. Eligible organizations from the Caribbean region include non-governmental organizations (NGOs), community-based organizations (CBOs), government agencies, regional organizations, small and medium-sized enterprises (SME), universities, and consortia of these entities.

(Source: Dominica News Online)

• US mortgage rates climbed for the first time in three weeks. The average for a 30-year, fixed loan was 6.49%, Freddie Mac said in a statement Thursday. Last week’s average was 6.47%, the lowest in more than a year.
• The US housing market has been starting to benefit from an expectation that the Federal Reserve will cut its benchmark interest rate at its meeting in September. A recent measure of inflation showed that price pressures are abating, bolstering the case for lower rates.
• The 30-year rate “will likely trend down in the coming months as inflation continues to slow,” said Sam Khater, Freddie Mac’s chief economist. “Lower rates are good news for potential buyers and sellers alike.”
• Some of the gridlock in the housing market is already easing up. Homeowners have often been reluctant to sell and part with lower mortgage rates, limiting the amount of inventory for sale. But more properties are coming onto the market. In the four weeks through Aug. 11, new listings climbed 4.5% from the same period a year earlier, according to Redfin Corp.
• “In the medium-run, we expect the economy to land softly and housing inventory to continue to recover,” said Ralph McLaughlin, a Realtor.com senior economist. “This should put downward pressure on mortgage rates this fall and winter and will set the stage for a much better season for homebuyers in 2025.”

(Source: Bloomberg)

• U.S. retail sales rose more than expected in July, which could help to allay financial market fears of a sharp economic slowdown that were fanned by a jump in the unemployment rate.
• Meanwhile, another report showing a smaller-than-expected increase in the number of Americans filing for unemployment benefits last week showed resilience rather than deterioration in labor market conditions and lifted stock futures, Treasury yields, and the dollar.
• Futures traders raised the odds to about 75% that the Federal Reserve will ease by just 25 basis points in September after the Commerce Department said retail sales increased 1.0% last month after a downwardly revised 0.2% drop in June. Economists polled by Reuters had forecast retail sales advancing 0.3% after previously being reported as unchanged.

(Source: Reuters)

• Aided by an expansion in its footprint, which more than doubled topline growth, Regency Petroleum Company Limited (RPL) recorded a net profit of $60.14Mn for the six months ending June 2024, a 77.0% increase relative to the first half of 2023.
• Revenues grew 144.1% year over year to $886.56Mn as the company opened additional service stations, which translated into higher volumes being sold during the period.
• As revenues grew, the cost of sales also increased by 149.2% to $756.53Mn, which resulted in a 118% improvement in gross profit from $59.66Mn to $130.03Mn. However, gross profit margins narrowed to 14.7% from 16.4% as cost of sales outpaced revenue growth.
• Administrative and General Expenses grew 163.9% from $25.24Mn to $66.62Mn, largely due to its new service stations that have resulted in increased staff costs, depreciation charges, and security costs. That being said, operating profit increased 80.1% to $63.82Mn when compared to the $35.44Mn in the prior period.
• The company is continuing its expansion plan with its Spanish Town Road, St. Andrew service station, which is expected to be operational by September. This is following a delay in its Q2 timeline due to the need to settle final invoices related to the project’s cost. Additionally, RPL recently announced the opening of its first franchise location with DW People’s Choice Company Ltd in Whithorn, Westmoreland. The company will provide technical support and the sale of fuel to this service station, which now displays RPL branding.
• RPL’s stock price has decreased by 9.09% since the start of the calendar year. The stock closed Wednesday’s trading session at $2.20 and currently trades at a P/E of 44.0x, which is above the Junior Market Distribution Sector Average of 16.3x, suggesting that the market is already pricing in expectations of future earnings growth given its expansion plans.

(Sources: JSE and NCBCM Research)

• Despite solid revenue growth, higher administrative expenses tempered bottom-line growth for Kingston Wharves Limited( KW). KW reported net profit attributable to owners of $1.35Bn for its six months ended June 2024, representing a 5% (or $58.36Mn) increase relative to last year.
• Over the six months, KW revenues increased by $684.96Mn or 15.5% to $5.11Bnaided by the performances in its two key operational areas- terminal (+4% or $129Mn) and logistic services (+36% or $523Mn).
• Increased revenues from specialized logistics and warehousing operations, and port ancillary services fueled the growth. These areas benefited from capital investments and system improvements aimed at enhancing the functionality of its facilities and the competitiveness and efficiency of its services.
• However, the company’s cost of sales has increased by 16.6% (or $407.80Mn) to $2.87Bn, which weighed on its gross profit margin, which declined from 44.3% in H1 2023 to 43.8% in H1 2024. Similarly, administrative expenses also grew by 8.5% (or $69.30Mn) to $885.98Mn due to higher depreciation charges and expenses associated with the commissioning of key strategic infrastructure projects. These projects are aimed at enhancing the terminal's capacity for increased throughput and ensuring long-term resilience.
• Going forward, KWL plans to continue undertaking initiatives geared towards increased efficiency in its terminal operations, chiefly the demolition and removal of aged on-dock structures and the re-organisation of the terminal space. Management anticipates that this will complement its initiatives to improve customer experience, enhance training of its team, and increase utilization of digital technology.
• KWL’s stock price has increased marginally by 0.9% since the start of the calendar year. The stock closed Wednesday’s trading session at $33.15 and currently trades at a P/E of 12.2x which is above the Main Market Energy, Industrials and Materials Sector Average of 8.7x.

(Sources: JSE and NCBCM Research

• Over the last decade, economic growth in Latin American countries has been weak, averaging 0.9% between 2015 and 2024, which is lower than the 2.0% recorded in the “lost decade” of the 1980s. This was revealed in the Economic Commission for Latin America and the Caribbean’s (ECLAC) annual report, titled 'Economic Survey of Latin America and the Caribbean 2024: Low Growth Trap, Climate Change, and Employment Trends’\.
• The report noted that the region must boost growth to meet the environmental, social and labour challenges it currently faces. This will require the harmonization of macroeconomic and productive development policies that stimulate investment and productivity and facilitate inclusive and sustainable growth.
• Economic growth in the region’s economies remains weak. In the first quarter of 2024, the region’s economy grew by 1.5% relative to the previous year. This was the third consecutive quarter in which the GDP of the Latin American economies increased by less than 2.0% and the sixth quarter in which growth was lower than the 4.5% recorded in the third quarter of 2022.
• For 2024, when including Guyana, the ECLAC projects that the Caribbean region will grow by 8.4% this year. Excluding Guyana ECLAC forecasts 2.6% growth for the Caribbean region. Guyana alone is forecast to experience a remarkable 29.2% growth. Furthermore, low growth is also forecasted for all other subregions, including 1.5% in South America and 2.2% in Central America and Mexico.
• Other country-specific growth forecasts for 2024 include the Dominican Republic (5.2%), Costa Rica (4.0%), Panama (2.7%), Bahamas (2.3%), Barbaods (3.7%), Jamaica (1.8%), and Trinidad and Tobago (2.4%).
• Overall, growth across the Latin American and Caribbean region is expected to average 1.8% in 2024, below 2.2% and 4.0% in 2023 and 2022, respectively. On the contrary, a higher growth rate of 2.3% is expected for the region as a whole in 2025, where the performance of South America is set to be the main driver.
• That said, the region’s economic growth remains conditioned by an uncertain external scenario, given high inflation and interest rates that remain elevated worldwide, which tends to delay the normalization of monetary policy easing in the main advanced countries, depressing external demand and keeping financial conditions tight.

(Source: Economic Commission for Latin America and the Caribbean)

• Although there have been increases in mortgage rates globally, Guyana has stood out for being able to significantly reduce this over the past three years as a result of direct policies implemented by the government, according to President Dr. Irfaan Ali.
• “The government has increased the mortgage interest relief from GYD15Mn to GYD30Mn… to date, approximately close to 17,000 homeowners have benefitted, and the total costs of GYD2.7Bn, more than GYD2.7Bn that was put back directly in the pockets of 17,000,” the Head of State said recently.
• He related that the government negotiated a reduction in interest rates for mortgages by close to 2.5%. “As a result of this policy, we have seen an increase in housing loans by almost 20% or GYD56Bn, and these housing loans have the lowest default rate in this hemisphere,” Dr. Ali said.
• The President emphasised the decades of targeted policies implemented by successive People’s Progressive Party/Civic (PPP/C) governments to promote affordable and sustainable housing to all Guyanese. The government, he said, has confronted previous housing challenges and, over the years, has allocated ownership of land to thousands, established initiatives like the turnkey programme, developed new housing schemes, and regularised several areas.
• Going forward, he added, “Guyanese from all walks of life, can rely on the promise of our government to provide housing at an affordable rate.”

(Source: Guyana Chronicle)