• US shares opened higher on Tuesday as an uneasy calm returned to global markets after days of sharp falls. The Nasdaq closed 1% higher, the S&P 500 rose by 1%, and the Dow Jones was 0.8% higher. London's FTSE 100 closed 0.2% higher, while Germany's Dax ended flat, and France's Cac 40 lost 0.3%. Markets in South Korea and Taiwan regained ground, rising around 3.5% after record falls.
• Stock markets were hit by a global sell-off on Friday as weak US jobs growth stoked fears of a downturn in the world's largest economy. Official data showed employers added 114,000 jobs in July, far fewer than expected, while the unemployment rate rose to 4.3%, the highest in nearly three years. The figures suggested the long-running US jobs boom might be ending, driving speculation about when and by how much the Federal Reserve will cut interest rates. High borrowing costs and signs of a waning AI-fueled rally also worried markets.
• Friday's decline brought the Nasdaq down about 10% from its recent peak. The Dow Jones dropped 1.5%, and the S&P 500 ended 1.8% lower, following declines in Asia and Europe. Japan's Nikkei 225 index tumbled nearly 6%. The Federal Reserve held interest rates but signaled likely cuts in September.
• Recession fears have renewed calls for the Federal Reserve to cut interest rates in September. Last week, the Fed held rates at 5.25%-5.5%, the highest in two decades, while other central banks cut rates. Some experts believe this was a mistake, likely causing continued market volatility. "Markets are very volatile and will likely stay so until the Fed decision in September," said Stefan Angrick of Moody's Analytics. Seema Shah of Principal Asset Management questioned if the Fed had waited too long, noting job gains had dropped below the 150,000 threshold for a solid economy.
• The market turmoil occurred amid a heated US presidential campaign, intensifying political debate over the Fed's actions. President Joe Biden said the economy was still making progress, with the US economy expanding at an annual rate of 2.8% this spring. Analysts noted the unemployment rate rise was driven by more people looking for work, not a surge in job losses.

(Source: BBC News)

• The U.S. State Department updated its travel advisory for Jamaica last week, maintaining the Level 3 status but softening its language on crime, noting that “tourist areas generally see lower rates of violent crime than other parts of the country.”
• In the latest advisory, the previous statement about sexual assaults occurring “frequently, including at all-inclusive resorts,” has been removed. Now, it states that the U.S. Embassy “routinely receives reports of sexual assaults, including from U.S. citizen tourists at resorts.”
• The State Department also included new information about medical preparedness. “U.S. citizens should not expect the same level of health care available in Jamaica as is available in the United States. This includes generally lower levels of emergency service response times or routine care for illness or injury,” the advisory states.
• The update on Jamaica is routine, as the State Department reviews travel advisories at Level 3 and above every six months.
• The reissued advisory was met with significant opposition. Jamaican Prime Minister Andrew Holness and Sandals Resorts International Chairman Adam Stewart denounced the advisory's portrayal of Jamaica, while Jamaica's U.S. Ambassador, Audrey Marks, called on U.S. officials to retract their evaluation.
• The most recent advisory strongly recommends that American travellers obtain travel insurance with medical evacuation coverage before visiting Jamaica. The ongoing Level 3 advisory suggests that U.S. citizens reconsider travel, which is one step below Level 4, where U.S. citizens would be advised against travelling to Jamaica.

• An Anti-Money Laundering (AML) Unit has been established within the Companies Office of Jamaica (COJ) to enhance regulatory compliance and transparency.
• Speaking at a recent Jamaica Information Service (JIS) Think Tank, Manager for the AML Unit, Inger Hainsley-Bennett, shared that its primary focus is to leverage the new powers granted to Registrars, ensuring that the information provided by companies is accurate and verifiable.
• The Unit also ensures beneficial ownership compliance, so that beneficial ownership information is accurately reported and that the true owners and controllers of companies are disclosed.
• By implementing the AML Unit, the COJ aims to foster a culture of transparency and accountability within its organisation and among partners.
• This strategic implementation comes in response to the heightened scrutiny and monitoring efforts by the Financial Action Task Force (FATF) to combat money laundering and ensure financial integrity.
• Jamaica was placed on the Financial Action Task Force (FATF) Grey List in February 2020 and was officially removed in June 2024. This removal came as a result of the country enhancing the effectiveness of its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime, fulfilling the commitments in its action plan concerning the strategic deficiencies.

(Source: JIS & NCBCM Research)

• Despite successive shocks, the global economy has shown surprising resilience. The IMF’s latest update to the World Economic Outlook suggests global growth remains steady at 3.2%, and inflation is expected to continue falling, though at a slower pace.
• Central America, Panama, and the Dominican Republic are the exceptions. This year, they outperformed the rest of Latin America and other emerging markets with stronger growth and lower inflation. In the medium-term, the IMF projects growth in these countries to be about double that of the Latin American and Caribbean region (LAC) —more in line with other emerging market economies.
• In the medium-term, however, growth prospects have weakened. Growth in Latin America is projected to average just 2% over the next 5 years. This is much lower than those of peer economies across Europe and Asia.
• In light of the weakened growth prospects, IMF’s deputy managing director Kenji Okamura provided four recommendations for the LAC region:
• The first recommendation is to rebuild fiscal buffers to allow for investment in productivity-boosting areas like climate change and technology. Secondly, strengthen monetary policy frameworks to keep inflation within central bank targets.
• Thirdly, improve the governance and business climate, which is crucial for fostering competition and attracting both private and foreign investment. Focus on addressing crime, which impacts migration and economic stability.
• The final recommendation is to boost labour force participation. Since 2000, the labour force in Latin America has been growing at 0.5% per year. Now, the share of the working-age population in the region is peaking, posing additional challenges. Policies can help by encouraging more women to enter the workforce through training or by expanding childcare programs and parental leave benefits.

 (Sources: International Monetary Fund)

• Costa Rica’s agricultural sector has experienced several problems this year. Although, in general terms, the country’s economic activity continues to grow, albeit at a slower pace than in 2023, this is not the case for this particular sector.
• Climatic factors and the exchange rate have impacted production. In fact, for the second consecutive month, the sector reports negative growth rates. In April, while national production grew by 3.6% year-on-year (YoY), agricultural production decreased by 0.2%. In June, national economic activity grew by 4.2% YoY, whereas agricultural activity decreased by 2.4%.
• The Central Bank reports that lower production of coffee and bananas is the cause of this negative result in the agricultural sector. Oscar Arias Moreira, president of the National Chamber of Agriculture and Agribusiness, stated that the cumulative and sustained effect of the appreciation of the colon over the last 20 months has caused a significant drop in exports of these two products. The reduction in exports could be close to 30%.
• According to Arias, during the first part of the year, the good performance of pineapple was able to offset the fall in banana and coffee production. However, by April and May, pineapple activity had slowed down significantly. He also acknowledges that domestic production is decreasing mainly due to climatic factors: either the drought at the beginning of the year or the rains in April and May.
• Juan Manuel Sanchez, president of the National Chamber of Coffee Growers, confirms that the 2023-2024 harvest was lower than that of the previous period, 2022-2023. He predicts that the 2023-2024 harvest, which is gaining momentum as of October this year, will be like that of previous years but not higher. The exchange rate has had a severe negative effect on the coffee sector, as it reduces their income due to the exchange rate differential.

(Source: Tico Times)

• The German economy unexpectedly contracted in the second quarter after skirting a recession at the beginning of the year. July's inflation rose, showing the continuing struggles of the euro zone's biggest economy.
• Germany's gross domestic product contracted by 0.1% in the second quarter compared with the previous three-month period, preliminary data from the statistics office showed on Tuesday. Analysts polled by Reuters had forecast a 0.1% quarter-on-quarter increase in adjusted terms, following 0.2% economic growth in the first quarter.
• Germany was the worst-performing major economy last year, with gross domestic product contracting by 0.3%, and it came close to recession at the start of 2024 - buffeted by a combination of cyclical and structural headwinds. In the second quarter, Germany was a laggard among its peers again. While the German economy contracted, France and Spain did better than expected and Italy held its ground.
• "While German data is stagflationary, the eurozone as a whole provides a picture of a relatively solid but potentially fading recovery with sticky inflation," said Carsten Brzeski, global head of macro at ING. The euro zone's economy grew 0.3% in the three months to June, data showed on Tuesday.
• Also countering expectations, German inflation rose in July to 2.6%, preliminary data from the Federal Statistics Office showed on Tuesday. Analysts polled by Reuters had forecast no change to the inflation rate after consumer prices rose by 2.5% on the year in June.
• Core inflation, which excludes volatile food and energy prices, was at 2.9% in July, unchanged from the previous month. This is primarily due to the continued strong inflation in services, which remained unchanged at 3.9% in July, as high wage increases still push prices up.

(Source: Reuters)

• Prices in British shops rose at the joint-slowest rate since October 2021 this month. The rate was held down by falls in the cost of non-food items as food prices continued to rise, the British Retail Consortium said on Tuesday. Shop prices in July were on average 0.2% higher than a year earlier, the same annual increase as in June and joint lowest since October 2021.
• Food prices rose by 2.3%, the smallest increase since December 2021, while non-food prices dropped by 0.9%. On Monday, the Confederation of British Industry reported that retailers had suffered a fall in sales this month due to bad weather and poor general trading conditions.
• Many Britons are still feeling the squeeze after a surge in inflation in 2022 and 2023, and wages have only recently started to recover the lost ground. Headline consumer price inflation targeted by the Bank of England held at its 2% target in June but is forecast to rise as the effect of falls in energy prices in the second half of last year begins to drop out of the annual comparisons.
• The BoE - which may cut interest rates on Thursday - is most concerned about services price inflation, which at 5.7% in June was well above the central bank's forecast.
• However, Dickinson warned that food prices could also be about to rise as the effect of last year's fall in commodity prices fades and climate change damages harvests following unusually wet weather in England and extreme heat elsewhere.

(Source: Reuters)

• Tropical Battery (TROPICAL) announced its intention to graduate from the Junior Market to the Main Market of the Jamaica Stock Exchange (JSE) before the end of this year, subject to regulatory approvals.
• JSE’s listing requirements set a $500Mn maximum participating equity capital J$500m for a junior market company post-IPO and during its life on the Junior Market. Since its Junior Market listing in September 2020, Tropical Battery has experienced substantial growth with a total market capitalization of $2.8Bn meaning it surpassed the junior market's $500Mn capital requirement given that a minimum of 20% of each company must be sold at IPO.
• Additionally, revenue is forecasted to grow more than threefold, from $1.8Bn in 2020 to $5.7Bn for this fiscal year ending September 30, 2024, with over 50% of its revenue earned in US dollars.
• TROPICAL’s strategy comprises transforming from a battery and automotive distributor into an energy solutions provider across Jamaica and the Caribbean. It has pursued this through acquisitions, organic growth, new services, and partnerships, supported by new subsidiaries focused on electric vehicles, renewable energy, and financial products. Reflective of this strategy, TROPICAL has a presence in Jamaica, the Dominican Republic, and the United States (Silicon Valley, California).
• In addition to graduating to the local main market, Management indicated that once the company continues to show significant growth, it intends to eventually list the company on the US market.
• Management anticipates that the benefits of transitioning to the Main Market would include increased visibility and credibility both locally and internationally, a broader investment base, access to more capital to fund strategic initiatives, enhanced corporate governance and continued growth and expansion. However, transitioning to the main market after just 4 years on the junior market implies that TROPICAL would miss out on 6 years of tax benefits, given the 10-year tax incentive offered to junior Market companies.

(Sources: JSE & Tropical Battery)

• IronRock Insurance Company Limited (ROC), resumed trading of its ordinary shares, effective Tuesday, July 23, 2024.
• IronRock filed its outstanding 2023 Audited and 1st Quarter (Q1) Financial Statements on July 22, 2024, therefore remedying its breaches of the JSE’s Junior Market Rule Appendix 2, Part 4 (1) (e) & 4 (2) (e). As a result, the JSE has lifted the suspension of trading in the ordinary shares of ROC, as the Company is now compliant.
• ROC’s Q1 2024 results saw insurance revenue increase by 29% over Q1 2023 to $401.4Mn, driven by successful reinsurance treaty renewals and growth in Marine Cargo. Its net profit rose to $5.52Mn (net profit margin of 1.4%) from a loss of $11.63Mn in Q1 2023.
• Likewise, Audited results showed FY2023 insurance revenues increased by 40.7% to $1.40Bn and net profit increased 149.7% to 83.94Bn at a net margin of 6.0% up from 3.4% in FY2022.
• ROC’s stock price closed at $2.18 before its suspension on July 2nd. In light of the positive financial performance and resumed trading activity, ROC’s share price has since increased by 37.6%, closing Monday’s trading session at $3.00. At this price, the company trades at a P/E of 6.4x, which is below the Junior Market Financial Sector Average of 14.2x.

(Source: JSE and NCBCM Research)

• The Export-Import Bank of the United States (EXIM) has formalized a significant partnership with the Republic of Trinidad and Tobago, marking a milestone in US-Caribbean relations. EXIM President and Chair Reta Jo Lewis recently met with Trinidad and Tobago’s Prime Minister Keith Rowley and Minister of Finance and the Economy Colm Imbert to sign a Memorandum of Understanding (MOU) valued at US$500Mn.
• The agreement aims to develop opportunities and support financing across several key sectors including maritime domain awareness, cybersecurity, renewable energy, and water sanitation. 
• In addition to the MOU, EXIM has extended a $150Mn Letter of Interest to Trinidad and Tobago’s Ministry of Finance. A Letter of Interest (LI) is an indication of Ex-Im Bank's willingness to consider financing for a given export transaction. This $250Mn funding is designated for acquiring maritime vessels and aircraft to enhance the nation’s maritime domain awareness, search and rescue capabilities, and border security. 
• The funds should facilitate access to US-manufactured goods and services, along with technical support, for various national needs including security, renewable energy, climate change mitigation, and small business support. 
• The MOU and LI reflect a significant boost in confidence from the US towards Trinidad and Tobago’s government and its people.

(Sources: Caribbean National Weekly and EXIM)