• Underlying US inflation eased for a fourth month on an annual basis in July, keeping the Federal Reserve on track to lower interest rates next month. The so-called core consumer price index — which excludes food and energy costs — increased 3.2% in July from a year ago, still the slowest pace since early 2021. The monthly measure rose 0.2%, a slight pickup from June’s surprisingly low reading, Bureau of Labor Statistics (BLS) figures showed Wednesday.
• Economists see the core gauge as a better indicator of underlying inflation than the overall CPI. That measure also climbed 0.2% from the prior month and 2.9% from a year ago. BLS said nearly 90% of the monthly advance was due to shelter, which accelerated from June. Inflation is still broadly on a downward trend as the economy slowly shifts into a lower gear. Combined with a softening job market, the Fed is widely expected to start lowering interest rates next month, while the size of the cut will likely be determined by more incoming data.
• Before their September meeting, officials will get more inflation readings plus another jobs report — which will be heavily scrutinized after the disappointing July figures helped spark a global market selloff and fanned recession fears. Fed Chair Jerome Powell and his colleagues have recently said they’re focusing more on the labor side of their dual mandate, which they’re likely to stress at their annual symposium in Jackson Hole, Wyoming next week.
• Excluding housing and energy, service prices were up 0.2%, the first increase in three months, but still at a tame pace, according to Bloomberg calculations. While central bankers have stressed the importance of looking at such a metric when assessing the nation’s inflation trajectory, they compute it based on a separate index.
• That measure, known as the personal consumption expenditures price index, doesn’t put as much weight on shelter as the CPI does — and that’s part of the reason why the PCE gauge is trending closer to the Fed’s 2% target. The PCE measure, released later this month, draws from the CPI as well as certain categories within the producer price index. Those parts of the PPI were fairly tame in July, and the headline figures rose by less than forecast, according to government data out Tuesday.

(Source: Bloomberg)

• The European Central Bank will cut its deposit rate twice more this year, in September and December, according to an over-80% majority of economists polled by Reuters, fewer reductions than markets currently expect.
• Since April, economists in Reuters surveys have remained consistent in predicting a total of three cuts this year, including the one already delivered in June. By contrast, interest rate futures are pricing a total of four cuts by end-year.
• An unexpected rise in euro zone inflation in July, near record-low unemployment and still-steady economic activity in the common currency bloc give ECB policymakers cause to be cautious.
• Over 80% of economists, according to a Reuters poll, predicted that the ECB's Governing Council would deliver two more 25 basis point rate cuts this year, in September and December, taking the deposit rate to 3.25%. Importantly, the majority of forecasters looking for two more ECB rate cuts this year has held steady despite financial market volatility earlier this month.
• Euro zone inflation, which unexpectedly rose to 2.6% last month from 2.5% in June, will average 2.4% this year, the poll showed, and not reach the ECB's 2% target until the second half of 2025. That outlook was slightly more optimistic than projections the ECB made in June, but some are bracing for the central bank's staff projections to worsen in September.
• The central bank is expected to reduce the deposit rate four times next year, according to poll medians, reaching 2.25% by end-2025.

(Source: Reuters)

• Productive Business Solutions Limited (PBS) announced that there would be a further delay in the release of its audited consolidated financial statements for the year ended December 31, 2023, pursuant to Rule 408 (iv) of the Jamaica Stock Exchange Main Market Rules.
• PBS now expects to publish its audited consolidated financial statements no later than October 31, 2024.
• The further delay has been caused by additional audit procedures as a result of required restatements of material accounting transactions undertaken by PBS’s subsidiary in Costa Rica, which it expects will mostly impact PBS’s consolidated financial statements in accounting periods prior to 2021.
• In keeping with the JSE’s Main Market Rule 408 (iii) on Audited Annual Financial Statements JSE suspended trading in the shares of Productive Business Solutions Limited (PBS) on July 2, 2024, pending the Company’s submission of its 2023 Audited Financial Statements. The Company’s 2023 Audited Financial Statements became due on March 30, 2024, and were ninety-three (93) days overdue on July 1, 2024.
• PBS’s stock price closed at $1.45 on July 1, 2024, representing a 9.9% decline since the start of the calendar year.

(Sources: JSE and NCBCM Research)

• Sagicor Investments Jamaica Limited has advised of the basis of allotment of shares to successful Applicants in the offer of up to 400,000,000 ordinary shares in the capital of R.A. Williams Distributors Limited.
• The Offer made subject to the Prospectus dated June 19, 2024, closed on July 31, 2024, receiving $420Mn in subscriptions relative to the IPO’s size of $400Mn, a 5% oversubscription.
• The Prospectus outlines two (2) Reserved Share Pools and a Non-Reserved Share Pool. The methodology and allotment of ordinary shares are as follows:
• Applicants in the Company Applicants Reserve Share Pool shall receive full allotment of their subscription.
• Applicants in the Key Strategic Partners Reserve Share Pool shall receive full allotment of their subscription.
• All applicants from the Non-Reserved Share Pool shall receive the first 5,000,000 units plus a pro-rata allocation of approximately 56.01% of the balance in excess of 5,000,000 units.

 (Source: JSE)

• Real estate tourism is rapidly evolving in the Dominican Republic, driven by large-scale projects requiring substantial investments, according to the Dominican Association of Real Estate Tourism Companies (ADETI). Currently, 65 to 70% of projects in the sector are dedicated to real estate tourism, with an additional 10% being mixed-use, including hotels.
• Michael Lugo Risk, Executive Director of ADETI, reported that the association’s members alone are adding approximately 6,000 new rooms in 2024. ADETI comprises around 15 major tourist real estate companies. Lugo highlighted that infrastructure investments in the sector exceed $10Bn, including both new developments and remodeling projects.
• Eduardo Read, President of ADETI, emphasised the association’s commitment to sustainable tourism. He stated that ADETI is fully supporting the “green tourism” initiative, aiming to minimise emissions through the use of electric vehicles and solar energy production.
•  “It’s a cultural shift. Some projects are over 50 years old, making change challenging, especially for large areas spanning 30 to 40 million square meters. However, we are making gradual progress,” Read explained. He also addressed misconceptions about real estate tourism, noting that many constructions are inaccurately labeled as such. “They call any apartment project real estate tourism, but these often lack a master plan,” he said.
• Read stressed that ADETI ensures all its projects include treatment plants and adhere to ecological standards. “We do not permit construction without ecological criteria and sustainability. However, there are buildings with 8 to 20 apartments built without these considerations, purely for sale,” he concluded.

(Source: Dominican Today)

• Services activity in Brazil grew more than expected in June to hit an all-time high, eclipsing a record that had been set in December 2022, data from statistics agency IBGE showed on Tuesday.
• The service sector, which accounts for about 70% of all activity in Latin America's largest economy, grew 1.7% in June from the previous month, exceeding the 0.8% expected by analysts polled by Reuters.
• IBGE said that all five main groups surveyed by the agency posted positive results in the period, with a 1.8% expansion in transportation notably offsetting a negative reading in the previous month. "The result is largely due to air transport, driven by a drop in air ticket prices," IBGE research manager Rodrigo Lobo said.
• Services activity was also up 1.3% in June from a year earlier, according to IBGE, again beating the 0.8% expected by economists in the Reuters poll. The sector now stands 0.5% above the previous record high in the IBGE data series, which had been set in late 2022, the statistics agency added.
• "Our assessment indicates that Brazil's economic activity continues to perform well," said PicPay economist Igor Cadilhac, highlighting a strong labor market. "We expect this scenario to continue throughout the year, despite recent deterioration in inflation and the need to keep interest rates high for longer."
• Brazil's central bank recently flagged greater caution in its monetary policy stance and said it would raise interest rates if needed to control inflation. The country's benchmark interest rate, Selic, currently stands at 10.5%.

(Source: Reuters)

• Oil prices climbed on Wednesday on estimates about shrinking U.S. crude and gasoline inventories as the market watched for a possible widening of the Middle Eastern war, which could curtail global oil supplies.
• U.S. crude oil and gasoline inventories were expected to have fallen last week, while distillate stocks rose, according to market sources, citing American Petroleum Institute data (API) on Tuesday.
• The API figures showed crude stocks shrunk by 5.21 million barrels in the week ended Aug. 9, the sources said, speaking on condition of anonymity. Gasoline inventories eased by 3.69 million barrels, and distillates rose by 612,000 barrels. Falling inventories could indicate higher demand in the U.S., the world's biggest oil consumer.
• The market was also awaiting signs of the next moves by Iran, which has vowed a severe response to the killing of a Hamas leader late last month, which Tehran blamed on Israel. Israel has neither confirmed nor denied its involvement. The U.S. Navy has deployed warships and a submarine to the Middle East to bolster Israeli defenses.
• A broadening conflict in the region could affect crude supplies from Iran and neighboring producer countries, analysts said, tightening inventories and supporting prices.
• Keeping oil prices from moving even higher, the International Energy Agency (IEA), meanwhile, kept its 2024 global oil demand growth forecast unchanged on Tuesday but trimmed its 2025 estimate, citing the impact of a weakened Chinese economy on consumption.

(Source: Reuters)

• British pay grew at its slowest pace in nearly two years, likely reassuring the Bank of England that inflation pressures are easing, and there was a surprise drop in unemployment, official figures showed on Tuesday.
• Average weekly earnings, excluding bonuses, were 5.4% higher than a year earlier in the three months to the end of June, down from 5.8% in the three months to May and the lowest since August 2022, the Office for National Statistics said. However, the jobless rate - based on a survey the ONS is currently overhauling - fell from 4.4% to 4.2%, its lowest since February, bucking expectations of a rise in a Reuters poll of economists.
• When it cut interest rates on Aug. 1 after keeping them at a 16-year high of 5.25% for nearly a year, the BoE said it would continue to keep a close eye on wage growth. Investors see a roughly one-in-three chance of a September BoE rate cut. Importantly, pay is still growing at nearly double the pace the BoE thinks is compatible with keeping inflation at its 2% target. Data on Wednesday is likely to show inflation back above target.
• "Today's data are consistent with a gradual and cautious dialling down of restrictive policy. But ... firming GDP growth, if sustained, could lead to a firming labour market recovery - which could result in a more shallow rate-cutting cycle," said Sanjay Raja, chief UK economist at Deutsche Bank.

(Source: Reuters)

• Despite revenue growth, Seprod’s net profit attributable to shareholders declined by 6.6% (or $123.97Mn) to $1.76Bn for the six months ending June 30, 2024, compared to the prior year.
• The falloff in net profit was primarily due to the performance of its Trinidad subsidiary, A.S. Bryden Holdings (ASBH), which saw net profit attributable to shareholders declining by 41.3% (or TT$20.40Mn) due to expiration of one-off benefits which the company had in 2023 and higher than planned finance costs to acquire foreign exchange.
• Revenues for Seprod amounted to $58.33Bn, a 7.1% (or $3.87Bn) increase, compared to the $54.46Bn in 2023. The business benefited from a 27% increase in export sales and has been regaining lost margarine market share (in the domestic and export markets), which occurred during 2023 when the company embarked on the modernisation of its margarine plant.
• Direct expenses also increased 6.8% (or $2.77Bn); however, revenue growth outpaced the increase in direct expenses causing the gross margin to rise slightly to 25.6% of revenues from 25.4% in 2023.
• The overall effect of revenue growth was tempered by a 9.1% (or $890.38Mn) increase in operating expenses to $10.63Bn and a 21.8% (or $315.10Mn) increase in finance cost. The increase in finance cost included costs associated with foreign exchange, which has been increasing largely due to foreign exchange shortages in Trinidad and Tobago.
• Seprod’s stock price has appreciated marginally by 0.5% since the start of 2024 and closed Monday’s trading session at $80.11 per share. At this price, the stock trades at a P/E of 20.6x, which is above the Main Market Distribution & Manufacturing sector average of 13.1x.

(Sources: JSE & NCBCM Research)

• For the six months ending June 30, 2024, Fosrich Company Ltd. reported an unaudited net profit of $77.88Mn, a 52.07% (or $3.46Mn) decline year-over-year. A deterioration in its topline (revenues fell 13.8% or $280.19Mn) and an increase in administrative costs of 24.7% (or $129.89Mn) were the primary contributors to Fosrich’s weaker performance.

• Revenues decreased to $1.74Bn from $2.02Bn in 2023, due to the slowness in housing-starts locally, caused primarily by the considerable increase in interest rates in Jamaica in the current period when compared to the prior year.

• On the other hand, cost of sales declined by 28.0% (or $338.01Mn) to $868.79Mn driven by the substantial fall in solar panel and PVC ingredients prices on the world markets. The reduction in cost of sales outpaced the decline in revenues evidenced by gross margin increasing from 40.4% in June 2023 to 50.2% in June 2024.

• However, the bottom-line performance was tempered by an increase in administrative expenses of 24.66% (or $129. 89Mn).  These increases were derived from increased staff related costs for salary adjustments, improvements in staff benefits, increased marketing costs, increased travelling and motor vehicle expenses, and increased insurance costs due to increases in both policy renewal rates and exposure.

• During the quarter ending June 2024, Fosrich opened two new stores at Bayside in Montego Bay and Drax Hall in St. Ann. Construction of the new FosRich Superstore & Corporate Offices at 76 Molynes Road is advance, with the completion date now projected to be Q3, 2024. Management anticipates accelerated revenue growth largely stemming from its recent expansions and noted that the superstore has the potential to surpass $2Bn in sales.

• Fosrich’s stock price has decreased by 12.0% since the start of the year and closed Monday’s trading session at $2.20 per share. At this price, the stock trades at a P/E of 73.3x earnings, which is well above the Junior Market Distribution sector average of 16.17x earnings, suggesting that investors may still be optimistic about the company’s future growth prospects despite recent earnings decline.

(Sources: JSE and NCBCM Research)