rhand credit union co-operative society...
TRANSCRIPT
SME eSmart- Powering Your Potential Find out more today by calling: (868)-627-8879 ext. 228 or email: [email protected]
▪ Sagicor Financial Corporation Limited’s proposed bond issue initial rating assigned at CariAA
▪ Dominica Agriculture, Industrial and Development Bank’s rating reaffirmed at CariBB-
▪ Beacon Insurance Company Limited’s rating reaffirmed at CariA-
▪ The Government of the Commonwealth of Dominica rating reaffirmed at CariBB
▪ The Government of the Republic of Trinidad and Tobago rating reaffirmed at CariAA+
▪ Eastern Caribbean Home Mortgage Bank’s rating reaffirmed at CariBBB+
▪ Sagicor Group Jamaica Limited’s initial rating assigned at CariA
▪ NIF Holding Company Limited’s TT$4 billion issue rating reaffirmed CariAA
▪ Goddard Enterprises Limited’s rating reaffirmed at CariAA-
▪ NCB Global Finance Limited’s initial rating assigned at CariA
▪ RHAND Credit Union Co-operative Society Limited’s rating reaffirmed at CariBBB-
▪ Development Bank of Jamaica Limited’s rating upgraded to CariA- ▪ Bourse Securities Limited rating reaffirmed at CariA- ▪ PLIPDECO’s rating reaffirmed at CariA+
OUR UPCOMING WORKSHOPS!
IFRS 17 Insurance Contracts 8th & 9th October 2019 Trinidad
Benefits of a CariCRIS Rating to a Credit Risk Analysis Workshop:
Latest Rating Actions by CariCRIS
• Learn credit risk analysis through a structured and practical approach
relevant to the Caribbean
• Develop a comprehensive understanding of how to evaluate the risk of
common industries in the Caribbean
• Develop a keen understanding of business/financial risks and their potential
impact on future financial performance
DATE
WORKSHOP
COUNTRY
Please visit our website at www.caricris.com for the detailed Rationales on these and other ratings
CariCRIS’ credit ratings and daily Newswire can also be found on the Bloomberg Professional Service.
REGIONAL
Trinidad and Tobago
JMMB in front
Overall stock market activity yesterday resulted from trading in 21
securities of which nine advanced, six declined and six traded firm.
Barbados
Maloney, TCL differ on final ruling
EXECUTIVE CHAIRMAN of Rock Hard Cement, Mark Maloney, is expecting
the landscape for the cement industry to change for the better after
yesterday’s decision by the Caribbean Court of Justice.
Former MTW workers being paid
The 83 former Ministry of Transport and Works employees who were
retrenched during the first phase of the Barbados Economic Recovery
and Transformation (BERT) programme are smiling all the way to the bank.
Jamaica
Bad feelings in Rio Bueno
Residents in and around Bengal, St Ann, near Rio Bueno have mobilised
themselves to oppose a planned limestone-processing operation in the
area. The project, a collaboration between a new company, Jamaica
World, and a Spanish mining outfit known as EPSA aims to process
approximately four million metric tonnes of construction aggregates from
the mining operation over five years.
Producers Price Index — June 2019
As at June 2019, the Producer Price Index for the mining and quarrying
industry decreased by 0.5 per cent which is the latest report according to
the Producer Price Index Bulletin.
2% increase raises interest in poverty reduction strategy
A ministry paper tabled in the Senate last Friday by the Government has
indicated that there was a two per cent increase in the national poverty
rate between 2016 and 2017.
Jamaica Continued
The LAB tips JSE market cap to over $2 trillion
The Limners and Bards Limited (The LAB), an advertising agency and film
production company, was recently listed on the Jamaica Stock Exchange
(JSE).
Ciboney shell company back on the market
Finsac, the majority owner of Ciboney Group Limited, is making another
try at selling its stake in the company, which has no assets.
Lasco partner UCANN granted cannabis cultivation licence
United Cannabis Corporation (UCANN), the American company that has
partnered with Lasco Manufacturing for the production of cannabis-
infused water among other cannabis medicinals, has been issued a
licence to cultivate cannabis through a company called Cannabinoid
Research and Development (CRD).
Kingston Properties gets voter approval for rights issue
Shareholders in Kingston Properties Limited approved a resolution to
increase the authorised share capital of the company as an initial step
towards raising funds via a rights issue.
Guyana
Green Power Solutions now authorised dealer of SunPower panels
GREEN Power Solutions Inc. has today announced a new partnership with
SunPowerTM, a leading manufacturer of high efficiency solar panels, to
distribute SunPowerTM solar technology in Guyana.
The Bahamas
Some Cruise Projects ‘Closer Than Others’
A Cabinet minister says negotiations over multiple cruise industry
investments in The Bahamas remain on track although some “are closer
than others” to coming to fruition.
Belize
INCOME TAX AND GENERAL SALES TAX DEPARTMENTS MERGE INTO BELIZE
TAX SERVICE
In late June, the Senate debated and passed the Belize Tax Services bill,
which became law after it was signed by the Governor General. The
primary objective of this new piece of legislation, which was initially
introduced in the House of Representatives by Prime Minister Dean Barrow
in his Minister of Finance capacity, was for the two revenue-collecting
government departments to become one mega tax-collecting agency,
collecting both Income Tax and General Sales Tax (GST) under the
umbrella of the Belize Tax Services, which falls under the Ministry of
Finance.
British Virgin Islands
Gov’t can’t account for uncollected revenues’- Premier Fahie
Premier and Minister of Finance, Hon Andrew A. Fahie (R1) has revealed
that the Ministry of Finance is unable to account for the territory’s
uncollected revenues brought forward from previous years as a result of
an error with the current accounting software at his Ministry.
Dominica
Dominica Credit Union League and Liberty Cooperative Credit Union sign
MOU
The Dominica Co-operative Societies League Ltd. (DCSLL) and Liberty Co-
operative Credit Union Ltd. (Liberty) have signed an historic co-operation
agreement to foster greater collaboration between the two credit union
movements.
INTERNATIONAL
United States Tariff Fears Caused a U.S. Import Surge. Now Warehouses Are Full
A short drive outside Los Angeles lies one of the world’s biggest warehouse
complexes. Gene Seroka says its 1.8 billion square feet of capacity --
enough room to house 9 million cars -- is “bursting at the seams.”
Walgreens to close about 200 stores in United States
Walgreens Boots Alliance Inc (WBA.O) said on Tuesday it plans to close
about 200 U.S. stores and expects to record related pre-tax charges of
between $1.9 billion and $2.4 billion.
FedEx to end ground-delivery deal with Amazon
U.S. package delivery company FedEx Corp (FDX.N) will terminate its
contract at the end of this month for small-package ground deliveries
with Amazon.com Inc (AMZN.O), Bloomberg reported on Wednesday.
United Kingdom
UK house prices unexpectedly fall in July - Halifax
British house prices unexpectedly dropped for a second month in a row in
July, figures from mortgage lender Halifax showed on Wednesday, adding
to signs that households are growing warier of making major financial
decisions ahead of Brexit.
UK winter energy bills to fall as regulator lowers price cap
Energy bills are set to fall for millions of households in Britain this winter after
the country’s energy regulator told suppliers to reduce bills by 6% from
Oct. 1, following a drop-in wholesale gas and power prices this year.
Europe
German chemical deal lifts European shares, FTSE lags
European shares rose on Wednesday after three days of falls, as deal-
making activity in the German chemical sector helped offset losses from
London-listed mining majors, with U.S.-China trade worries lingering.
China
China to unveil special tax policy in Shanghai Free Trade Zone
China said on Tuesday it will implement a special tax policy in the newly
expanded Shanghai Free Trade Zone, in a bid to promote free trade as
Beijing’s year-long trade dispute with Washington threatened to escalate
into a full-blown economic war.
China state banks seen supporting yuan to steady declines: sources
China’s major state-owned banks have been active in the yuan forwards
markets this week, sources said, using swaps to curb greenback supply as
authorities sought to slow the currency’s decline after its break past the
key 7 to the dollar threshold.
China's July forex reserves fall to $3.104 trillion amid rising trade tensions
China’s foreign exchange reserves fall by $15.54 billion in July to $3.104
trillion, central bank data showed on Wednesday, as the yuan came
under pressure amid rising trade tensions with the United States.
Japan
SoftBank says Vision Fund 2 could start investing soon, bags big gains on
first
SoftBank Group Corp’s (9984.T) second Vision Fund could start investing as
soon as next month, founder and Chief Executive Masayoshi Son said, as
the technology conglomerate reported a leap in profits at its first $100
billion fund.
India
India's central bank makes unconventional rate cut in bid to spur growth
The Reserve Bank of India (RBI) lowered its benchmark interest rates for a
fourth straight meeting on Wednesday with a slightly bigger than
expected cut, underscoring its worries about India’s near-five-year low
economic growth pace.
Global
Oil sets new seven-month low on trade tensions
Oil prices fell further on Wednesday, extending recent heavy losses as
deepening U.S.-China trade tensions weighed on the outlook for the
global economy and energy demand.
Foreign investors offload Asian equities as Sino-U.S. trade war flares
Foreign investors dumped Asian equities in the first six days of August after
two months of buying, as the United States ramped up pressure on China
with a $300 billion trade barrage last week.
Futures turn lower as investors flock to bonds, gold
U.S. stocks futures turned lower on Wednesday after investors flocked to
safe-haven gold and U.S. government bonds amid worries over the
escalation in U.S.-China trade war denting global growth.
Green Power Solutions now authorised dealer of SunPower panels Wednesday 7th August, 2019 – Guyana Chronicle
GREEN Power Solutions Inc. has today announced a new partnership with
SunPowerTM, a leading manufacturer of high efficiency solar panels, to
distribute SunPowerTM solar technology in Guyana.
Green Power Solutions Inc. is a subsidiary of the Nand Persaud Group.
According to the company, the SunPower panels are rated highly in the
global market by consumers and have received many international
awards.
“We are so happy to be on board with SunPowerTM… they are global
leaders in solar panel innovation and technology. This is definitely a win for
renewable energy in Guyana and we cannot wait to do more,” said
Green Power Solutions Inc.’s CEO, Darren Ramdial.
According to Nand Persaud Group Marketing Executive, Cynthia
Jagnandan, innovation is central to SunPower’s core, with solar
technology developed and tested in Silicon Valley.
She explained that SunPower’s MaxeonTM solar panels offer higher
efficiency and durability than conventional solar panels currently
available on the market, providing homeowners more electricity over
time.
The Marketing Exec said SunPower’s innovative MaxeonTM solar cells
generate more energy than conventional solar cells, and are durable,
even in extreme weather conditions.
Meanwhile, Jim Dawe, who is the VP of Global Sales, noted that
“SunPower is proud to partner with Green Power Solutions Inc. in Guyana
due to their experience with solar in the market and focus on high quality
solutions.”
It was explained that SunPower customers can expect to receive up to 55
-60 per cent more energy in the same space compared to conventional
solar panels, a savings potential that is already being taken advantage of
in more than 500,000 homes worldwide.
SunPower panels are available for sale at Green Power Solution’s head
office at Lot 1 Tain, Port Mourant, Corentyne, Berbice.
Green Power Solutions Inc offers nationwide distribution of all products via
its delivery network.
<< Back to news headlines >>
Some Cruise Projects ‘Closer Than Others’ Tuesday 6th August, 2019 – Tribune 242
A Cabinet minister says negotiations over multiple cruise industry
investments in The Bahamas remain on track although some “are closer
than others” to coming to fruition.
Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business
that talks over the Grand Lucayan purchase, Carnival’s $100m cruise port
for Freeport, and the $250m outsourcing of Nassau’s cruise port were all
“proceeding on plan” from the government’s perspective.
Voicing optimism that several of these projects will be underway before
year-end, Mr D’Aguilar said: “My official response is that negotiations are
continuing.
“Some of the deals are closer than others, some still have some ways to
go. As far as we’re concerned everything is on schedule and proceeding
on plan. Everything is subject to final Cabinet approval. Hopefully some
will be done before the end of the year; that would be the intention.”
Both Carnival’s cruise port and the Grand Lucayan purchase were
announced during the 2019 first quarter. The latter deal, featuring a joint
venture between Royal Caribbean Cruise Lines and the Mexican-based
ITM Group, is proposing the $65m acquisition of the hotel coupled with a
$130m investment to turn the surrounding area and Freeport Harbour into
a destination product.
Michael Scott, chairman of Lucayan Renewal Holdings, the Government-
owned vehicle that controls the Grand Lucayan, also confirmed to this
newspaper that talks with ITM/Royal Caribbean are progressing.
“All the parties have met, we’re continuing on with the negotiations and
we’re on track,” Mr Scott said when contacted by Tribune Business,
declining to comment further.
Sources familiar with the Grand Lucayan talks, speaking on condition of
anonymity, said negotiations between the government and joint venture
over the sales agreement and Heads of Agreement for the project were
likely to begin this week.
“They’re pushing hard,” one contact said of the government. “They’re
getting down to the critical part of finalizing the Heads of Agreement. The
parties have had a status meeting, and all are aware of what’s
outstanding, what needs to be done, and are moving to the stage of
holding regular meetings to ensure they all stay on track.”
Tribune Business revealed last month that the government had extended
the Letter of Intent (LOI) for the Grand Lucayan purchase by 30-days to
end July as ITM and Royal Caribbean sought to tie down airlift and sealift
components for the project.
This newspaper was told that ITM, in particular, had become increasingly
uneasy over what it perceived as difficulties in tying down the Hutchison
Whampoa-controlled Freeport Harbour Company over redevelopment of
the harbour.
That project, and addition of extra cruise berths, is critical if ITM/Royal
Caribbean are to generate the passenger numbers necessary to sustain a
transformed Grand Lucayan. Multiple Tribune Business sources, though,
said the harbour and cruise port deal between ITM and Hutchison was
eventually signed at the beginning of July.
With sealift out of the way, attention has now turned to Grand Bahama
International Airport - also ultimately controlled by the Freeport Harbour
Company - given that securing sufficient airlift is also key to the ITM/Royal
Caribbean plans.
Tribune Business sources last week confirmed that the airport “is on the
radar” of all involved in the negotiations, given that its relatively high fees
in comparison to regional rivals have been blamed in the past for
deterring airlines from flying into Grand Bahama.
ITM is thought to have been reluctant to make headway on the Grand
Lucayan’s purchase, and negotiations with the government, until both the
harbour and airlift issues are squared away. It is seeking to bring an extra
two million cruise visitors to Grand Bahama per year, creating 2,000 jobs in
the first phase alone.
Its proposal focuses on developing water-based adventure theme parks
at both Freeport Harbour and around the resort. The Grand Lucayan will
be upgraded to “five-star hotel accommodation”, and feature multiple
gaming, entertainment and restaurant experiences in a bid to set Grand
Bahama apart from its competitors - not just Florida and other Caribbean
nations, but Nassau/Paradise Island and the Family Islands.
Meanwhile, the Government is also negotiating the transformation of
Nassau’s cruise port with Global Ports Holding, the Turkish-headquartered
and UK-listed, ports operator that it selected as the preferred bidder for
Prince George Wharf.
The Minnis administration is hoping that upgrading the port of entry for
more than 3.5m cruise passengers annually will act as a catalyst to spark
other efforts to revitalise downtown Nassau and the Bay Street area.
Global Ports Holding has pledged to provide a $10m interest free loan to
small Bahamian retail investors to enable them to acquire shares in an
investment fund that will have of 49 percent equity ownership in the
project. Those 20,000 Bahamians will hold shares in The Bahamas
Investment Fund set up by CFAL (the former Colina Financial Advisors).
Global Ports Holding operates 18 cruise ports and two commercial ports in
ten countries, spread across the Mediterranean, Atlantic and Asia-Pacific
regions. It serves over eight million passengers at its cruise ports, and
handles more than 300,000 TEUs (twenty-foot equivalent units) and about
five million tons of total cargo at its commercial ports.
<< Back to news headlines >>
INCOME TAX AND GENERAL SALES TAX DEPARTMENTS MERGE INTO BELIZE
TAX SERVICE Wednesday 7th August, 2019 – Amandala
In late June, the Senate debated and passed the Belize Tax Services bill,
which became law after it was signed by the Governor General. The
primary objective of this new piece of legislation, which was initially
introduced in the House of Representatives by Prime Minister Dean Barrow
in his Minister of Finance capacity, was for the two revenue-collecting
government departments to become one mega tax-collecting agency,
collecting both Income Tax and General Sales Tax (GST) under the
umbrella of the Belize Tax Services, which falls under the Ministry of
Finance.
Although it will take a few years for it to be completed, that merger
began yesterday and today, the media was invited to the Charles Bartlett
Hyde Building, which will house the Belize Tax Services.
Both the Income Tax Department and GST were headed by a
commissioner. Those two offices have now been absorbed into the Belize
Tax Services, which will be headed by a single individual, whose title is
Director General. Although this new government post was never
advertised, to the best of our knowledge, Prime Minister and Minister of
Finance, Dean Barrow, has given the nod to Michelle Longsworth to take
the reins of Belize’s new tax regime.
Asked what taxpayers should expect out of the new amalgamated
department, Longsworth told Kremandala that tax payers should expect
improved services from the new tax department.
“Taxpayers should begin to feel comfortable in coming to one location to
do their taxes,” Longsworth said.
Longsworth added that the second phase that taxpayers should look
forward to is “our integrated tax approach, which will be an online system
where taxpayers can access their tax account from the comfort of their
own homes.” Taxpayers will be able to file online and pay their taxes
online, Longsworth stressed.
Longsworth was asked how the new entity will affect employees.
Longsworth explained that the highly skilled cadre of employees from
both departments will now come together as one to serve the Belizean
people. “There has been no redundancy,” Longsworth declared.
We asked Longsworth about the training that has been provided for
employees.
“Since November last year, we started to retrain our tax professionals”,
Longsworth replied. “We started with career development training, with
changed management training; we had to be sure that our tax
professionals are ready to embrace the change that we foresee in the
next few years,” she further explained.
Financial Secretary Joseph Waight told us that this merger has been long
in coming, but that he is “glad it’s here, integrated, better service for our
taxpayers and hopefully more revenue.”
In a press release issued today, Friday, August 2, the government said,
“The Government of Belize established a Program Office for the
Modernization of Tax Administration and appointed Mrs. Michelle
Longsworth as the Program Manager in October 2018.”
The government release goes on to say that the position has evolved to
Director General. “Mrs. Longsworth will continue to work along with the
program team to establish a modern service-orientated tax
administration, integrated with other government agencies and financial
institutions, all businesses and citizens of Belize,” the release stated.
The release said that the new management team will continue to work on
the redesign of the department according to the current good practices
and standards for tax administrations, deliver services to taxpayers and
optimally use its own human resources and knowledgeable staff “to
manage compliance according to risk utilizing a wide range of internal
and third party data.”
Lisa Clare, the Belize Tax Services’ Deputy General with responsibility for
Policy and Programs, discussed the functionality of the system and the
fact that the launch is only the beginning of changes. The overall
modernization will be done in a phased approach over the next few
years.
The department will also improve its outreach on taxes to introduce the
system to school children, who are at a stage in life when learning is often
more effective, said the government press release.
In January 2018, the Government of Belize requested and received from
the Caribbean Regional Technical Assistance Center (CARTAC) technical
assistance to assist the government with current operations and
technology systems that support tax administration in Belize.
The release concluded by saying that today marks the beginning of the
implementation of the new tax administration system, which will be
completed in 2022.
<< Back to news headlines >>
Tariff Fears Caused a U.S. Import Surge. Now Warehouses Are Full Wednesday 7th August, 2019 – Bloomberg
A short drive outside Los Angeles lies one of the world’s biggest warehouse
complexes. Gene Seroka says its 1.8 billion square feet of capacity --
enough room to house 9 million cars -- is “bursting at the seams.”
The warehouse district is part of the Inland Empire, serving the port of Long
Beach and the twin port of Los Angeles, where Seroka is executive
director. Together they handle almost half of American’s maritime trade
with China. If you live in the U.S., especially the western half, your
toothbrush, television or shoes may well have passed through the Empire.
Bloated storage facilities are a consequence of President Donald Trump’s
trade war with China and an illustration of how it’s throwing supply lines
into disarray, forcing business to improvise. But as the tariffs keep
mounting, they’re running out of solutions to avoid them.
Imports have been piling up there over the past year or so -- offering a
kind of safety valve for the more than 200,000 U.S. businesses, from Home
Depot to Walmart, that use the California ports.
They could rush goods through customs anytime Trump threatened new
charges on imports, saving millions of dollars in some cases. Then they
could keep the stuff in the Empire until delivery time, sometimes for weeks
or months longer than normal.
Now, Seroka says that spare room is down to an unprecedentedly low
level of about 1%-2%. Try to squeeze in more stuff, in other words, and it’ll
be impossible to drive forklifts around or even walk the aisles.
Sept. 1 Deadline
So companies won’t be able to repeat this cost-saving strategy when the
next tariff deadline arrives. And Trump just said it’s less than a month
away, on Sept. 1. He tweeted last week that the U.S. will start charging
10% on about $300 billion of Chinese imports that have escaped tariffs so
far. The U.S. on Monday formally labeled China a currency manipulator in
a rapid escalation of the trade war.
For importers, “the ability to front-load, as they did last year, to a large
extent is taken off the table,” said Jock O’Connell, an international trade
adviser at Beacon Economics.
It’s not just near ports that storage space is strained, he said. “The surge in
imports late last year, driven by anxieties over higher tariffs, coincided with
the continued explosion of e-commerce in generating a largely
unprecedented demand for warehouse space.”
That’s been a boon to owners of industrial real estate such as Prologis, one
of the world’s biggest warehouse landlords and a major owner of space
in the Inland Empire. Its shares have soared more than 35% this year.
Sellers have been amassing inventory –- it rose at a 7.9% annual pace in
June, the fastest for six years –- and now face pressure to clear it. That’s
creating some “head-scratching puzzles,” said O’Connell. He recalls
visiting a store in Sacramento during a 95-degree heatwave, and finding
winter jackets on prominent display.
The congestion may intensify, as new China tariffs coincide with back-to-
school shopping –- and, if Trump escalates them as he’s threatened to do,
potentially the holiday season.
The California ports themselves aren’t handling as much shipping as they
did last year, when imports surged to a record in the rush to beat tariffs.
But the pressure on storage space means the system is getting gummed
up in other ways, Seroka said. Shipping lines are stuck with empty
containers waiting for cargo to export back to Asia, and wait times are
long for containers to reach railways and trucks from the shore.
“We’re running pretty fluid now, but it’s not economically fluid,” he said.
While the crammed warehouse reflects short-term strategies adopted by
U.S. importers, the ports’ shipping logs reflect what may turn out to be
more important long-run effects of Trump’s crackdown.
For example, the drop in arrivals this year reflects a sharp slowdown in
China trade –- but traffic with other Asian nations, especially Vietnam, is
rising, a trend that pre-dates Trump but may accelerate on his watch.
“Last year, it was like ‘Oh my gosh, the tariff is going to hit at the end of
the year, let’s get it in,’” said Jason Tolliver, head of Americas logistics and
industrial research at Cushman & Wakefield.
Now, he said, companies are asking: “Do we want to manufacture in
China, or somewhere else in Southeast Asia?”
<< Back to news headlines >>
Walgreens to close about 200 stores in United States Tuesday 6th August, 2019 – Reuters
Walgreens Boots Alliance Inc (WBA.O) said on Tuesday it plans to close
about 200 U.S. stores and expects to record related pre-tax charges of
between $1.9 billion and $2.4 billion.
The Deerfield, Illinois-based company in June said it would close about
200 stores in the United Kingdom as performance in its UK Boots business
continued to lag in the latest reported quarter.
The store closures are part of the company’s cost management program
that is aimed at mitigating the pressure related to generic drug prices, the
company had said in June.
The program is expected to deliver annual cost savings in excess of $1.5
billion by 2022, the company said in a regulatory filing bit.ly/2YJYG6U on
Tuesday.
<< Back to news headlines >>
FedEx to end ground-delivery deal with Amazon Wednesday 7th August, 2019 – Reuters
U.S. package delivery company FedEx Corp (FDX.N) will terminate its
contract at the end of this month for small-package ground deliveries
with Amazon.com Inc (AMZN.O), Bloomberg reported on Wednesday.
The move comes two months after FedEx decided not to renew its
contract with Amazon for U.S. cargo delivery through its plane-based
express service.
Amazon has been building out its own delivery network of planes, trucks
and vans and is seen posing a potential long-term challenge to FedEx
and rival United Parcel Service Inc (UPS.N), both of which have long
counted the e-commerce company as a major customer.
<< Back to news headlines >>
SoftBank says Vision Fund 2 could start investing soon, bags big gains on
first Wednesday 7th July, 2019 – Reuters
SoftBank Group Corp’s (9984.T) second Vision Fund could start investing as
soon as next month, founder and Chief Executive Masayoshi Son said, as
the technology conglomerate reported a leap in profits at its first $100
billion fund.
SoftBank said last week it had secured $108 billion in pledges for its Vision
Fund 2 (VF2) from participants including Microsoft Corp (MSFT.O) and
Apple Inc (AAPL.O), without breaking out their individual contributions.
The anchor investors from the first fund, Saudi Arabia and Abu Dhabi, are
showing “high interest” in taking stakes and negotiations are ongoing, Son
said on Wednesday after SoftBank turned in first-quarter operating
earnings that blew past consensus estimates.
That result was aided by a stellar performance at the first Vision Fund,
whose operating profit jumped 66% on year to 397.6 billion yen ($3.74
billion) for the three months ended June.
SoftBank is relying on proceeds from the first Vision Fund (VF1) along with
other assets to bankroll its $38 billion contribution to the second fund.
“Vision Fund 2 could start investing pretty soon, next month or the month
after,” Son said.
With the first fund having spent much of its capital on fast growing, late-
stage startups like Uber (UBER.N) and WeWork parent The We Company,
SoftBank is now turning its attention to the second fund to maintain its
oversized industry presence.
“Many Japanese companies are sailing using an old map. Using our new
map we are looking for a new continent,” Son said.
The first fund’s $66.3 billion investment in 81 firms is now worth $82.2 billion,
as the value of its bets in firms like hotel chain OYO, workplace messaging
app Slack (WORK.N) and delivery service Doordash has grown.
But much of the fund’s gains are paper profits, with its unrealized gains in
the first quarter at 604 billion yen.
That was, however, offset by 195 billion yen in unrealized losses from a
drop in value of its stake in firms like ride-hailing firm Uber, which is trading
below its IPO price.
SoftBank’s results have been increasingly volatile as Son shifts focus from
the predictable income of telecoms in favor of bets on startups with
shifting valuations.
The group raked in a quarterly operating profit of 688.8 billion yen,
outstripping a 336 billion yen estimate from five analysts compiled by
Refinitiv.
The number was, however, down 3.7% from a year ago when results were
propped up by a stake sale in chip designer Arm’s China business.
SoftBank’s shares, which have rise 42% this year, closed down 0.2% ahead
of the earnings.
<< Back to news headlines >>
Oil sets new seven-month low on trade tensions Tuesday 6th August, 2019 – Reuters
Oil prices fell further on Wednesday, extending recent heavy losses as
deepening U.S.-China trade tensions weighed on the outlook for the
global economy and energy demand.
Brent crude futures LCOc1 were down 70 cents, or 1.2%, at $58.26 a barrel
by 1205 GMT, setting a fresh seven-month low. Prices have lost more than
20% since hitting their 2019 peak in April.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 38
cents, or 0.7%, at $53.25.
Brent has plunged more than 10% over the past week after U.S. President
Donald Trump said he would slap a 10% tariff on a further $300 billion in
Chinese imports from Sept. 1, sending global equity markets into a tailspin.
“The market continues to grow more uncertain about the demand
outlook given the deterioration of trade talks between China and the
U.S.,” ING analysts said in a note.
The bank lowered its 2019 price outlook, mostly because of demand
concerns, forecasting that global oil supplies will exceed consumption in
the first half of next year.
Trump on Tuesday dismissed fears that the trade row with China could be
drawn out further. His comments failed to prevent shares in Asia from
falling for an eighth straight session on Wednesday. London's FTSE 100 .FTSE
gained. [MKTS/GLOB]
“We believe that the oil market is now in a phase of exaggeration.
Demand is not sufficiently weak to justify the current price performance.
Assuming there is no recession, oil demand should continue to see robust
growth,” Commerzbank said in a note.
Tensions in the Middle East remain high after Iran seized a number of
tankers in recent weeks in the Strait of Hormuz, a major chokepoint for oil
shipments.
Saudi Energy Minister Khalid al-Falih and U.S. Energy Secretary Rick Perry
on Tuesday expressed mutual concern over threats targeting freedom of
maritime traffic in the Gulf.
“There are concerns that an event could occur at any moment ... the risk
might be shifting to the upside in the near term for oil contracts,” said
Michael McCarthy, chief market strategist at CMC Markets.
Elsewhere, data indicating a larger-than-expected drop in U.S. crude
stocks offered some support to oil prices after several weeks of large
draws on inventories. [API/S]
Official data from the government’s Energy Information Administration
(EIA) is due on Wednesday.[EIA/S]
The EIA on Tuesday lowered its domestic oil growth forecasts for the year
after Hurricane Barry disrupted Gulf of Mexico output in July. Production is
set to rise by 1.28 million barrels per day to 12.27 million bpd this year.
<< Back to news headlines >>
Foreign investors offload Asian equities as Sino-U.S. trade war flares Wednesday 7th August, 2019 – Reuters
Foreign investors dumped Asian equities in the first six days of August after
two months of buying, as the United States ramped up pressure on China
with a $300 billion trade barrage last week.
Overseas investors sold about $4.5 billion of regional equities during the
period, data from stock exchanges in South Korea, Taiwan, India,
Thailand, Philippines, Indonesia, and Vietnam showed.
Sharp outflows from Asian markets point to increased worries that trade
tensions between the world’s two top economies could escalate, and
regional economies and corporate earnings might deteriorate further.
U.S. President Donald Trump said last Thursday he would slap a 10% tariff
on the remaining $300 billion of Chinese imports starting Sept. 1, marking
an end to a truce in the year-long trade war that was struck in June.
In response, China let its currency weaken 1.4% on Monday, sending it
past the key 7-per-dollar level for the first time in more than a decade,
and then the United States labelled Beijing a currency manipulator.
MSCI Asia-ex-Japan index: MIAPJ0000PUS had fallen 6.4% this month as of
Tuesday’s close, after shedding 1.7% in July.
“Recent foreign outflows from Asian equities clearly suggest that investors
are getting nervous on markets given escalating trade tensions,” said
Chetan Seth, a strategist for Nomura Securities in Singapore.
It might get harder for the United States and China to ease or soften these
tensions given how events have unfolded over the last few days, he said.
Goldman Sachs said markets were pricing in a less than 15% chance of a
trade deal being agreed. It estimated 13% and 8% cumulative earnings
downside for MSCI China and MSCI Asia-ex-Japan in 2019-2020 under a
“no deal” scenario.
Taiwan and India saw the biggest outflows in Asia, with net selling of $1.8
billion and $1.1 billion respectively. South Korea also witnessed outflows, of
$919 million.
Taiwan and South Korean companies are more exposed to the Sino-U.S.
trade tussle as they have extensive ties with tech firms in China and are
part of their supply chains.
Indian shares were undermined last month after the federal budget raised
import tariffs on many items, hiked taxes on the rich and proposed
changes in shareholding norms.
A slew of disappointing earnings by Asian firms for the second quarter also
increased investor caution on regional markets.
Refinitiv data showed major Asian firms such as Tata Motors (TAMO.NS),
Canon Inc (7751.T) and Nissan (7201.T) have posted second-quarter
earnings below expectations.
“So far 1H earnings in Asia-ex-Japan markets have been below estimates
– although still early days. The question investors need to answer is what
happens to 2020 earnings as markets in 2H will start discounting next year’s
earnings,” said Nomura’s Seth.
“If trade tensions persist, there may be more downside to current
consensus earnings estimates.”
In July, foreigners had invested $234 million in Asia, much lesser than $4.2
billion inflows in June.
<< Back to news headlines >>
Futures turn lower as investors flock to bonds, gold Wednesday 7th August, 2019 – Reuters
U.S. stocks futures turned lower on Wednesday after investors flocked to
safe-haven gold and U.S. government bonds amid worries over the
escalation in U.S.-China trade war denting global growth.
At 8:15 a.m. ET, Dow e-minis 1YMcv1 were down 167 points, or 0.64%. S&P
500 e-minis EScv1 were down 16.5 points, or 0.57% and Nasdaq 100 e-minis
NQcv1 were down 42.75 points, or 0.57%.
<< Back to news headlines >>
JMMB in front Wednesday 7th August, 2019 – Trinidad Express Newspaper
OVERALL stock market activity yesterday resulted from trading in 21
securities of which nine advanced, six declined and six traded firm.
Trading activity on the First Tier Market registered a volume of 564,164
shares crossing the floor of the Exchange valued at $2,593,365.57. JMMB
Group Ltd was the volume leader with 491,224 shares changing hands for
a value of $1,133,994.33.
Unilever Caribbean Ltd registered the day's largest gain, increasing $0.32
to end the day at $25.30. The Second Tier Market did not witness any
activity. The SME Market did not witness any activity.
The USD Equity Market did not witness any activity.
<< Back to news headlines >>
Dominica Credit Union League and Liberty Cooperative Credit Union sign
MOU Tuesday 6th August, 2019 – Dominica News Online
The Dominica Co-operative Societies League Ltd. (DCSLL) and Liberty Co-
operative Credit Union Ltd. (Liberty) have signed an historic co-operation
agreement to foster greater collaboration between the two credit union
movements.
President of the DCSLL, Josephine Dublin and Chairman of Liberty,
Mitchelle Lake signed the agreement which will span areas of technical
co-operation, sharing of best practices and strategic initiatives to benefit
both movements. The signing was completed immediately following the
48th Annual General Meeting of the Caribbean Confederation of Credit
Unions (CCCU), held in the Atlantis Crown Ballroom, Nassau, Bahamas
and was witnessed by the respective General Managers, Phoenix Belfield
& L. Vanessa Connor.
The agreement signing comes on the heels of the World Credit Union
Conference jointly hosted by the World Council of Credit Unions
(WOCCU) and the Caribbean Confederation of Credit Unions (CCCU)
held in Nassau, Bahamas under the theme “A Celebration of
Collaboration, Embracing the Future Together”. This interaction is a part of
the collaborative approach facilitated through the auspices of the
WOCCU and CCCU. Liberty and DSCLL will benefit from strategic
alliances, mutual partnerships, understudy programs and exchanges.
“We have been very impressed by the dedication and efforts of the
leaders of Liberty,” stated DCSLL President Josephine Dublin. “They are
advancing the principles and mission of the worldwide credit union
movement to help bring financial access and inclusion to families and
individuals residing and working in Anguilla and thereby build a stronger
financial future for all.”
Chairman of Liberty, Mitchelle Lake emphasized the importance of credit
union systems collaborating across the Caribbean region and beyond,
regardless of the geographical distance. He further noted that
“cooperation among co-operatives should not be a cliché, but rather
concrete actions rooted in the core ideology of cooperation among
cooperatives.
The shared vision, support and solidarity shown to Liberty by the Dominica
League and the other strategic alliances of WOCCU and CCCU
underscore the reality that geographical boundaries no longer signify
barriers and pose no hindrance to fostering greater partnerships.”
Lake further stated that, “Liberty, in particular, as it advances the credit
union movement throughout the OECS region in its foundational work in
Anguilla will benefit significantly from this co-operation agreement.”
The CCCU was established on August 17, 1972 in Dominica and serves as
the apex for co-operatives in the Caribbean. The CCCU is an affiliate of
WOCCU and represents 290 credit unions with an aggregate membership
of 2.6 million members and assets size of XCD$7.5 billion. A core focus of
the CCCU has included advocacy, compliance support services, and
creation of strategic initiatives to assist its members. Liberty is steadily
increasing its membership and recently held its Second (2nd) Annual
General Meeting on July 18, 2019 where members had the opportunity to
receive the Treasurer’s Report, Audited Financial Statements and Auditors
Report for the six-month operational phase ended December 31, 2018.
This exchange was facilitated during the WOCCU annual conference
under a broader agenda of promoting sustainable development of credit
unions and other financial cooperatives around the world to empower
people through access to high quality and affordable financial services.
World Council advocates on behalf of the global credit union system
before international organizations and works with national governments to
improve legislation and regulation. Its technical assistance programs
introduce new tools and technologies to strengthen credit unions’
financial performance and increase their outreach.
<< Back to news headlines >>
Gov’t can’t account for uncollected revenues’- Premier Fahie Monday 5th August, 2019 – Virgin Island News Online
Premier and Minister of Finance, Hon Andrew A. Fahie (R1) has revealed
that the Ministry of Finance is unable to account for the territory’s
uncollected revenues brought forward from previous years as a result of
an error with the current accounting software at his Ministry.
Noting that the issue was inherited from previous Premier and Minister of
Finance, Dr D Orlando Smith, the revelations came to fore following
persistent questioning from the Second District Representative, Hon Melvin
M. Turnbull for the Premier to provide details of the territory’s books to the
house.
Dr Smith couldn’t answer
Speaking at the Sixth Sitting of First Session of The Fourth House of Assembly
on July 31, 2019, Hon Turnbull had asked, “What is the detailed financial
position of the Territory as at 31st June, 2019: (a.) Balance in Consolidated
Fund?; (b.) Balance in the Reserve Fund?”
Further, in revealing that the question had been asked for the third time—
the latest being May 17, 2019—the member asked for, “Total Uncollected
Revenue brought forward from 31st December, 2015 to 31st December,
2018 and the amounts that have been collected from the previous year,”
including balance brought forward from each year spanning 2014 to
2019.
According to Premier Fahie, “I’ve been in the Opposition side with the
Honourable Member from the time he was asking this and I know that he
could not get an answer from then and in May when he asked it, we
didn’t get much of an answer then,” he said in noting that he demanded
that the Ministry provide answers to the House.
The Premier revealed that the Consolidated Fund as of June 30, 2019, was
$96,562,009 and the balance in the Reserve Fund as of June 30, 2019,
including dormant funds, is $81,064,100.
However, when it came to the question of total uncollected revenue
brought forward from December 31, 2015, to December 31, 2018, Premier
Fahie was unable to provide that information.
Software Failure
In his answer to Hon Turnbull, the Leader of Government Business in
acknowledging that the territory ought to have kept an accurate record
of their account receivables said, “It is all agreed that proper financing
and management dictated that we should try to keep these account
receivables accounts at manageable controllable levels.”
“Unfortunately, however, I was made aware that the current software
system failed to capture and track arrears of revenues, Mr Speaker, when
any of these outstanding revenues are paid, they are comingled with the
current year’s revenues,” he said.
Premier Fahie continued, “Member, there is a problem with the system,
that's the reason why you couldn’t get your answer in a year and change
and I’ve directed them to fix this system because it cannot continue that
way.”
Further, the Premier said he was only made aware of the issue after
pressuring staff at the Ministry of Finance to provide an answer and noted
that the current accounting software is now going through an upgrade
process.
‘Predicament’ – Hon Turnbull
According to Hon Turnbull, the issue is a predicament, “As a country not
knowing your accounts receivable, the money that is due to the
government… it is a sad state for this country to be in,” he said.
The Premier noted that while the information is available, the issue
persisted since under the National Democratic Party (NDP) government
and it will take some ‘old-time methods’ of accounting to capture the
data and get the full picture.
<< Back to news headlines >>
UK house prices unexpectedly fall in July - Halifax Wednesday 7th August, 2019 – Reuters
British house prices unexpectedly dropped for a second month in a row in
July, figures from mortgage lender Halifax showed on Wednesday, adding
to signs that households are growing warier of making major financial
decisions ahead of Brexit.
Halifax said house prices fell 0.2% on the month, compared with
economists’ forecasts in a Reuters poll for a 0.3% rise, while the annual
growth rate for the three months to July dropped to 4.1% from 5.7%, also a
sharper decline than expected.
“With Brexit due to occur on 31 October — and it currently very unclear
what will happen then — uncertainty will weigh down on the economy
over the next few months at least and hamper the housing market,”
economist Howard Archer of consultants EY ITEM Club said.
New British Prime Minister Boris Johnson has told officials to prepare for
leaving the European Union without a deal, something many businesses
fear would lead to significant short-term economic disruption.
Halifax’s annual house price growth rates remain elevated compared
with other measures of British house prices — which point to a broadly flat
picture — and Halifax said its annual figures were boosted by weak prices
a year earlier.
The most recent official data, for the 12 months to May, showed annual
house price increases of 1.2%, and that prices in London fell by the most
since 2009.
“We have seen a reported drop off in the number of properties sold
during the early months of summer, which may lead some to speculate a
downturn is on the horizon,” Halifax managing director Russell Galley said.
But low interest rates and rising wage growth would help prop up prices,
he added.
EY’s Archer said he expected house prices to rise no more than 1.5% this
year.
<< Back to news headlines >>
UK winter energy bills to fall as regulator lowers price cap Wednesday 7th August, 2019 – Reuters
Energy bills are set to fall for millions of households in Britain this winter after
the country’s energy regulator told suppliers to reduce bills by 6% from
Oct. 1, following a drop in wholesale gas and power prices this year.
Britain’s big six energy suppliers are Centrica’s British Gas, SSE, Iberdrola’s
Scottish Power, Innogy’s npower, E.ON and EDF’s EDF Energy.
The regulator, Ofgem, said the price cap for average annual
consumption will fall by 75 pounds ($91.21) to 1,179 pounds from Oct. 1. In
April the cap was raised by more than 10% to 1,254 pounds.
"Wholesale energy prices have significantly fallen between February and
June 2019. A combination of low demand during the winter, strong gas
supply and relatively healthy storage levels have pushed down wholesale
prices," Ofgem said here in a statement.
Wholesale UK gas and power prices have steadily lost up to half their
value since last September.
Ofgem was tasked with taking action by parliament last year after
lawmakers said customers were being overcharged for electricity and
gas.
The price cap applies to the so-called standard variable tariff (SVT), the
most popular type of rate offered by the big six, as well as to other default
deals, and is intended to be a temporary measure lasting until 2023 at the
latest.
Around 11 million customers are on SVTs.
Last month, the Competition and Markets Authority made changes to a
pre-payment meter cap which will lower costs by 25 pounds a year for
another 4 million customers.
Dermot Nolan, chief executive of Ofgem, told journalists that the
difference between SVTs and other tariffs will likely fall in the coming
months but there are still cheaper tariffs available which people can
choose to switch to.
“I do not think the cap is conservative. If you look at the pressure it has put
on energy supply firms to make efficiency cuts and up their game....then it
is not a ‘soft-touch’ price cap,” he said.
REVIEW
The shares of UK-listed Centrica and SSE were little changed. German
energy group E.ON posted a 75% drop in operating profit on Wednesday
at its retail unit, as the UK price cap in squeezed margins.
“The market in Great Britain is currently particularly challenging,” E.ON
chief financial officer Marc Spieker said.
Months of weak gas prices have hurt the bottom line of some gas
suppliers such as Centrica, which reported a near 50% drop in adjusted
operating profit for the first half of 2019, sending its shares to a 21-year low.
Ofgem reviews the default tariff cap each April and October and can
adjust it according to changing costs such as wholesale energy prices.
It is calculated using a formula that includes wholesale gas prices, energy
suppliers network costs and costs of government policies, such as
renewable power subsidies.
Ofgem said the wholesale energy cost part of the cap fell by 75 pounds
to 446 pounds and other costs, such as VAT and supplier profits, fell slightly.
“These reductions offset cost increases totaling 7 pounds of other
elements such as operating costs, network charges and environmental
schemes, resulting in an overall reduction of £75 in the level of the default
tariff cap,” Ofgem added.
Ofgem has estimated that the default tariff cap would have reduced the
price of average SVTs from the six largest suppliers by 75-100 pounds per
year since April 2015 had it been in place since then.
“(This) shows these suppliers have consistently charged more than the
indicative level of the default tariff cap, which reflects the estimated costs
of an efficient supplier,” it said.
<< Back to news headlines >>
German chemical deal lifts European shares, FTSE lags Wednesday 7th August, 2019 – Reuters
European shares rose on Wednesday after three days of falls, as deal-
making activity in the German chemical sector helped offset losses from
London-listed mining majors, with U.S.-China trade worries lingering.
German chemical groups Bayer (BAYGn.DE) and Lanxess (LXSG.DE)
agreed a $3.9 billion deal to sell chemical park operator Currenta to
Macquarie Infrastructure and Real Assets (MIRA) (MQG.AX), sending
shares in both European companies 2-4%higher.
That drove a more than 1% rise in the sub-index of chemical industry
companies .SX4P and helped the pan-European STOXX 600 index gain
0.3% after a volatile session on Tuesday after the latest exchanges
between Beijing and Washington.
The White House gave assurances late on Tuesday that it wants to press
ahead with negotiations and that helped Germany's export-heavy DAX
.GDAXI index outperform, shrugging off dire domestic industrial output
data for June.
“There is still a bit of hope feeding into the markets that we could go on
for a few weeks without any new form of retaliation,” said Craig Erlam,
senior market analyst at Oanda in London.
Worries, however, remained, with China's yuan CNY= weakening against
the dollar even after China's central bank took steps to control its fall on
Monday.
London's FTSE 100. FTSE, stacked with mining companies whose biggest
global client is China, lagged as commodities trader and producer
Glencore Plc (GLEN.L) sank on a 32% drop in first-half core profit.
The German share price index DAX graph is pictured at the stock
exchange in Frankfurt, Germany, August 7, 2019.
Banks .SX7P overturned earlier losses to rise 0.3% as a sharp rise in net profit
at Italian lender Banco BPM (BAMI.MI) put its shares on track for their best
day in over a month.
Italy’s biggest bank, UniCredit (CRDI.MI), however, lagged after it cut its
revenue target for 2019 due to expectations interest rates would remain
lower for longer.
Germany’s Commerzbank (CBKG.DE) fell almost 4% after it said its target
of a slight increase in full-year net profit had become “significantly more
ambitious.”
Investors also punished Dutch lender ABN Amro (ABNd.AS) for its
comments on weaker margins, sending shares to their lowest in three
years.
<< Back to news headlines >>
Bad feelings in Rio Bueno Sunday 4th August, 2019 – Jamaica Observer
Residents in and around Bengal, St Ann, near Rio Bueno have mobilised
themselves to oppose a planned limestone-processing operation in the
area. The project, a collaboration between a new company, Jamaica
World, and a Spanish mining outfit known as EPSA aims to process
approximately four million metric tonnes of construction aggregates from
the mining operation over five years.
An application to mine commencing with 50 hectares of land in the area
has been sent to NEPA and the project is awaiting a permit.
The zone, which lies between Discovery Bay and Rio Bueno incorporates
the Puerto Bueno Mountain and has been widely recognised as an
environmental treasure. The forested mountain is a habitat for rare and
endangered species of endemic plants, birds, insects, and the Jamaican
boa or yellow snake.
The scenic beauty of the area has attracted tourism stakeholders to the
area who have constructed villas along the coast as well as other
residents who have made their homes there.
Due to the environmental importance of the area, the Northern Jamaica
Conservation Association (NJCA) was the recipient of a grant in 2006 from
the Jamaican Forestry Department and the Food and Agriculture
Organisation of the UN (FAO) “to facilitate a discussion process on how to
best preserve one of the last relatively undisturbed areas of dry limestone
forest along the northern coast of Jamaica”.
According to a recent report the mining operation could employ up to
100 people and extract one million tonnes of limestone per year in the first
five years alone. An operation of this magnitude can generate negative
environmental impacts on the physical landscape as well as the nearby
community.
One major concern of residents in the area is air pollution, which was
outlined in an environmental impact assessment (EIA) report that is
currently posted on NEPA's website.
“The first impact is air pollution generated from the construction
equipment and transportation,” the report stated. “The second is from
fugitive dust from the proposed construction areas and raw materials
stored on site. Fugitive dust has the potential to affect the health of
construction workers, the resident population, and the vegetation.”
Paul Muschett, custos rotulorum of Trelawny, in a letter of objection to the
quarry sent to NEPA, wrote, “I am very concerned about the dust impact
on the towns of Rio Bueno and Calabar, especially the effect on the
children attending the all age school in Rio Bueno.”
Bengal resident and villa owner, Justin Krumm, echoed the custos's
sentiments in another letter.
“I am in the medical field and know the disastrous impact of quarry dust
on humans and livestock,” he stressed. “The levels given in the models
used for the EIA are alarming, multiples of safe levels. Already, we have
concerns about the bauxite dust that often exceeds NEPA standards.
These health impacts would be especially severe for the retirees who live
in the community as well as the children at nearby schools.”
NOT THE FIRST TIME
This is not the first time, however, that residents have been at odds with a
mining operation in the area. In 2010 due to “high environmental impacts
and nuisance to local residents” the NJCA successfully mobilised
community opposition to an application for a limestone quarry and
crushing plant by Diamond Property Development Company Ltd. The
result was that NEPA informed the applicants that a full EIA was needed
and only a small proportion of the area would be considered for a quarry.
Before that, mining also took place in the area as part of the construction
of the Queen's Highway. The mining was done by Jose Cartellone
Construcciones Civiles SA, a company from Argentina.
“The earlier Cartellone quarry was granted an exceptional permit to
operate for a limited time, to provide materials for the construction of the
north coast highway 'in the national interest',” explained Wendy Lee,
former CEO of the NJCA. “No such compelling reason exists today.”
Residents are now frustrated that after their successful efforts in 2010 they
are facing the same situation again, this time on a much larger scale over
a more prolonged period of time. The NJCA is no longer in existence, but
residents have still managed to organise themselves in opposition once
more.
Jamaica World, in a public meeting with residents in which the findings of
the EIA were presented and discussed, had sought to assure them that it
would provide employment to people in the area, that it would carry out
proper rehabilitation of the land after quarrying, and that procedures
would be used to diminish air pollution, vibrations and noise pollution
among other concerns. It also claimed that specific environmentally
valuable areas would be excluded from the operation and threatened
species of animals would be relocated to the untouched sections of the
area.
But according to environmentalist, Wendy Lee, experts have criticised
proposals to relocate wildlife from the quarry site to the adjacent forest as
misguided and useless. Also, limiting mining to particular sectors does not
mean that the rest of the zone will be undamaged.
“Apart from the intolerable levels of dust, noise, truck traffic, and
devaluation of property values faced by residents, there is a danger that
opening up even a small part of the area to mining would pose a threat
to the rest of the forest adjacent to the quarry site,” she revealed.
Residents were not convinced by the assurances they received from
Jamaica World, and one other major area of concern was the expected
traffic from trucks removing aggregate from the site.
200 TRUCKS PER DAY
“I didn't appreciate that the number of trucks involved could be upwards
of 200 per day which would travel along the main highway, which is one
of the most lethal stretches of road in Jamaica evidenced by the number
of fatal accidents over the 10-year period that I have lived here,” noted
Anthony Holmes, chairman of the Queen's Highway Citizens' Association
Ltd.
Concern from residents goes beyond just the potential damage to health
and well-being. Tourism stakeholders are naturally worried about the
impact of pollution and traffic on their businesses.
“This operation will have a detrimental effect on tourism to this area and
the surrounding developments (ie Puerto Seco beach, hotels along the
north coast) and other attractions in the area,” wrote Bengal resident,
Richard James, in his letter of objection.
“The profit made from this mining operation by the Government is
minuscule compared to that which will be lost to tourism over the 20-30
years and beyond of operation [of the quarry].”
Another resident, Audrey Holmes, lamented in her letter that, “residents in
the vicinity are justifiably concerned as to the potential financial losses
they may incur as a result of this venture. Clearly, it will devalue nearby
properties and have a significant impact on the ability to sell if residents
wished to do so in the future”.
The former CEO of NJCA, Wendy Lee, believes that as the residents move
forward with their challenge to the planned mining development, it is an
undertaking that should be significant and of interest to the rest of the
country.
“This is one of the last remaining examples of primary dry limestone forest
on the north coast, and it should be preserved for the people of Jamaica
and the world as a living laboratory for scientific research and education,
a reservoir of biodiversity, a spectacular natural landscape, and a source
of enjoyment and economic benefits through ecotourism,” she insisted.
The Jamaica Observer contacted NEPA for comment but the
organisation was not prepared to make any statements on the matter at
this time.
The acting manager for public relations and corporate communication at
NEPA Ollyvia Anderson stated in her response that, “at this time, the
agency wishes to advise that it does not believe it is appropriate to discuss
the matter outside of the July 12, 2019 public meeting held to discuss the
findings of the environmental impact assessment (EIA), following which
the public has 21 days within which to comment on the proposed
development”.
“The Natural Resources Conservation Authority (NRCA) will consider the
notes from the meeting and independent comments made outside of the
public meeting,” she continued. “A detailed review of the EIA will also be
considered in the making of the final decision by the NRCA. We are willing
to discuss this matter once a submission is prepared and considered by
the technical review committee of the NRCA.”
<< Back to news headlines >>
Producers Price Index — June 2019 Sunday 4th August, 2019 – Jamaica Observer
As at June 2019, the Producer Price Index for the mining and quarrying
industry decreased by 0.5 per cent which is the latest report according to
the Producer Price Index Bulletin.
In making the report public, the Statistical Institute of Jamaica (STATIN)
noted that the fall in the index resulted mainly from a 0.5 per cent decline
in the index for some other major groups such as bauxite mining and
alumina processing.
The index for the manufacturing industry registered a decrease of 1.5 per
cent. This was mainly attributed to a 9.9 per cent decrease in the index for
the major group “refined petroleum products”. This decrease was
however, tempered by increases in the index for the major groups 'rubber
& plastic products', up by 11.2 per cent and “food, beverages and
tobacco” which went up by 0.2 per cent.
For the 2019/2020 fiscal year-to-date, the index for the “mining and
quarrying” industry recorded an increase of 3.9 per cent, while the index
for the “manufacturing” industry fell by 0.8 per cent.
The point-to-point movements for the period June 2018 to June 2019 also
reflected a decrease of 15.2 per cent in the index for the “mining and
quarrying' industry. While on the other hand, the index for the
“manufacturing” industry increased by 2.5 per cent due to upward
movements in the index for the major groups “food, beverages and
tobacco”, which saw a 3.4 per cent jump and “refined petroleum
products” a -4.8 per cent.
<< Back to news headlines >>
2% increase raises interest in poverty reduction strategy Wednesday 7th August, 2019 – Jamaica Observer
A ministry paper tabled in the Senate last Friday by the Government has
indicated that there was a two per cent increase in the national poverty
rate between 2016 and 2017.
Ministry Paper 51 for 2019, which dealt with matters considered by the
Cabinet at its meeting on June 10 this year, noted that a report from the
Ministry of Finance and the Public Service on the poverty rates for 2017,
calculated from the Jamaica Survey of Living Conditions (JSLC) data, has
shown that in 2017 the economy grew by one per cent and registered an
increase in the number of people employed by 26,200 by July 2017.
However, it said that despite the positive out-turn, the overall poverty rate
increased by 2.2 percentage points to 19.3 per cent, up from the 17.1 per
cent recorded in 2016. The ministry paper said this was due to increases in
the Kingston Metropolitan Area (KMA) and other towns.
It also stated that the overall increase in poverty reflected regional
increases of 5.2 per cent in the KMA, which covers Kingston and St
Andrew and adjoining sections of St Catherine, and a 4.1 per cent
increase in other towns, which would include major towns without city
status.
Opposition Senator Lambert Brown used the opportunity of the Senate's
debate on the Pensions (Superannuation Funds and Retirement Schemes)
(Investment)(Amendment) Regulations, 2019, which broadens the range
of permissible assets in which pension funds can invest, to raise the
poverty issue on Friday, despite the Government's protestation that it was
not directly related to the issue being debated.
However, in raising it in the Senate he triggered the attention of others,
including the press, which had not received copies of the ministry paper
when it was tabled in the House of Representatives on Wednesday.
The ministry paper informed the Parliament that, conversely, the poverty
recorded for Rural Areas, which would include all areas outside of the
KMA and the other towns, had remained similar to the rates recorded in
2016, which were 20.1 per cent for 2017 compared to 20.5 per cent for
2016.
The Ministry Paper said that the JSLC report singled out the KMA, which
recorded declines for four consecutive years prior to 2017, registering the
largest increase in poverty in 2017, reflecting a 30 per cent decline in the
mean per capita income, which is the measurement of the average
consumption per person. An increase in poverty was also recorded for
other towns, which worsened the standard of living for that region for the
second consecutive year.
The ministry paper said though that the report advised that, despite a
contraction in the agriculture sector due to severe flooding in 2017, rural
area poverty remained stable at 20.1 per cent, and noted that the
measures introduced by the Government had assisted in curtailing an
increase in the poverty rate.
A second ministry paper tabled last week in Parliament, Ministry Paper 52,
which covered the Cabinet meeting on the following Monday, June 17,
reported that attention was also paid to the information included in the
JSLC report for 2017 at that meeting. No further details were added.
The most recent JSLC report was tabled in Parliament in July, showing a
significant boost to the rural economy in 2016, primarily due to an
improved performance in agriculture, which led to increased
consumption and an overall decline in poverty of 4.1 per cent.
According to data from the Statistical Institute, between 2009 and 2016
poverty fluctuated as follows: 2009 — 16.5 per cent; 2010 — 17.6 per cent;
2012 — 19.9 per cent; 2013 — 24.6 per cent; 2014 — 20 per cent; 2015 —
21.2 per cent; and in 2016 — 17.1 per cent. The rate of 24.6 per cent in
2013 was the highest for decades.
However, these reports are not tabled annually in Parliament and it
appears that the Government, in an effort to reduce the cycle, is seeking
to release the 2017 report soon. The report for 2015 was released in
October 2017 and it appears that the reports for both 2017 and 2018 will
be released this year.
The increased pace in delivering the reports to Parliament may have
been linked to the launch of the National Poverty Reduction Programme
(NPRP) in March, 2018, following the approval of the National Policy on
Poverty in September, 2017. The NPRP began official implementation on
April 1, 2018, with the commencement of the first three-year medium-term
programme over financial years 2018 to 2021.
<< Back to news headlines >>
The LAB tips JSE market cap to over $2 trillion Wednesday 7th August, 2019 – Jamaica Observer
The Limners and Bards Limited (The LAB), an advertising agency and film
production company, was recently listed on the Jamaica Stock Exchange
(JSE).
The prospectus by The LAB was published on July 10, 2019 with an offer
open date of July 17, 2019. The offer opened on July 17, 2019 at 9:00 am
and closed on the same day at approximately 4:00 pm due to over-
subscription.
“As the JSE continues its yearlong 50th anniversary celebrations, we
continue to add to our next 50 years of history, with the listing of The
Limners and Bards Limited (The LAB),” declared Andrea Kelly, general
manager, Jamaica Central Securities Depository (JCSD) and JCSD Trustee
Services Ltd in her welcome address at the listing. “This is the first
advertising agency and film production company to be listed on the JSE,
which is further diversifying the types of companies listed on the JSE.”
The LAB received 2,507 applications and applicants applied for
approximately 866.97 million units valued at $866.97 million. This was
approximately 358 per cent more than the company required, as the
Company offered 189.14 million units valued at $189.14 million.
With the addition of The LAB, the number of securities listed on the junior
market is now 42 and the total number of companies listed on the JSE is
82, with the total number of securities listed being 117.
As at July 25, 2019, the market capitalisation of the junior market
amounted to $145.5 billion. The market capitalisation of The LAB
amounted to $945.7 million. Therefore, the market capitalisation of the
Junior Market will increase to $146.48 billion and the overall market
capitalisation will amount to $2.04 trillion as at Friday, July 26, 2019.
In her remarks, co-founder of The LAB, Kimala Bennett, said she was
deeply humbled to see her dream become a reality before her eyes.
She further stated that she and her co-founder, Melissa Llewellyn returned
to Jamaica in 2007 with $20,000 and 11 years later in 2018 their company
grew revenues of $483 million dollars and pre-tax profits of $76.5 million
dollars.
Bennett said that “the advertising and film-making industries in Jamaica
are poised to break through in the region and the world, and The LAB has
the team to tap into some of that market share”.
NCB Capital Markets' vice-president of investment banking, Herbert Hall,
thanked The LAB team for affording NCB Capital Markets the opportunity
to be lead broker for this listing.
Hall stated that The LAB is the first listing on the junior market for 2019 by
NCB Capital Markets and this was also the first listing to use the NCB
Capital Markets GoIPO platform.
Hall further stated that “the GoIPO platform allows for easy tracking of
applications in real time, quicker processing of refunds to investors, and
we want this to be standard operating procedure for our market and as
such, we are willing to allow other brokers to use our GoIPO platform”.
<< Back to news headlines >>
Ciboney shell company back on the market Wednesday 7th August, 2019 – Jamaica Gleaner
Finsac, the majority owner of Ciboney Group Limited, is making another
try at selling its stake in the company, which has no assets.
Ciboney said in a market filing last week that attempts by Finsac to sell
were aborted after bids for the shares failed to result in a deal but noted
that another invitation to buyers to bid for the company was pending.
Ciboney traded at 11 cents per share on Monday, valuing the company
at $60.06 million. Finsac’s 72 per cent is worth approximately $43 million.
At the first invitation in 2018, Finsac touted Ciboney’s position as a listed
company as a drawing card for potential buyers. On Monday, Errol
Campbell, who is the manager of Finsac and chairman of Ciboney,
declined to discuss the latest push to offload the shell company. The
second offer was advertised on Sunday, August 4.
“Should this be successful, then it is anticipated that a change of
ownership will be effected during the second quarter of the current
financial year,” the notice read.
Ciboney’s financial year ends in May, which suggests that Finsac is hoping
for a deal to emerge by November.
Assuming that the shares are taken up by a single buyer, the new owner
would be required under stock market rules to make a bid for all minority
shares. It explains efforts in the market on Monday to acquire the stock at
prices as low as one cent and was a sign that the market expects Finsac
to eventually strike a deal.
Ciboney’s only asset, land in Culloden in Westmoreland, was sold to a
company called Green Forrest Limited for $250 million in December 2017.
The proceeds were used to reduce Ciboney’s debt and pay a dividend
to shareholders.
Its only holdings at last report in May were cash of less than $8 million, a
figure that remains subject to audit.
<< Back to news headlines >>
Lasco partner UCANN granted cannabis cultivation licence Wednesday 7th August, 2019 – Jamaica Gleaner
United Cannabis Corporation (UCANN), the American company that has
partnered with Lasco Manufacturing for the production of cannabis-
infused water among other cannabis medicinals, has been issued a
licence to cultivate cannabis through a company called Cannabinoid
Research and Development (CRD).
The update from United Cannabis CEO Earnest Blackmon comes 18
months after Lasco Manufacturing struck a US$103 million ($12.8 billion)
deal with United Cannabis and CRD to manufacture medicinals in the
form of capsules, sublinguals, roll-ons, and balms for export to the English-
speaking Caribbean and Central America.
On Tuesday, United Cannabis announced that it had initiated distribution
in The Cayman Islands for its patented Prana Hemp products as well as
hemp-derived extracts.
Lasco Manufacturing, which formed a new company for the venture
called Lasvac, has earmarked US$100 million for the manufacture and
distribution of the products. The remaining US$3 million will come from
United Cannabis, which holds a 50 per cent stake in CRD.
Aside from the capital expenditure, United Cannabis brings to the table its
long-term experience and intellectual property.
CRD will be responsible for growing the cannabis plant locally. The
company is said to be one of only 15 applicants to receive a cultivation
licence from the Cannabis Licensing Authority (CLA).
“Jamaica represents a significant market opportunity, and United
Cannabis has made a material investment in building the foundation
necessary to launch a full-scale operation there. The granting of this
licence is confirmation from the CLA that we are on our way,” Blackmon
said.
CRD focuses on genetic restoration, cannabinoid isolation techniques,
and scientific research. The company aims to engage the College of
Agriculture Science and Education, among other institutions and retirees
across Jamaica, to breed strains suitable for its business model.
The company awaits further approvals from the CLA but has not disclosed
what those permits entail.
“I am confident that our outstanding applications will be approved
shortly, and we look forward to establishing Jamaica as the production
hub for international distribution of United Cannabis products,” Blackmon
said.
United Cannabis currently sources high cannabidiol or CBD isolates and
distillates for its hemp products from licensed manufacturers in Europe. As
a biotechnology company dedicated to managing ailments through
cannabinoid-based products, United Cannabis develops, produces, and
distributes proprietary cannabis products and technologies, including its
patented product brand, Prana Therapeutics.
The company has a state-of-the-art grow, processing, testing, and
production facility in Colorado, United States, and has established a
strong presence in the hemp-derived cannabidiol market.
The partnership between Lasco Manufacturing and United Cannabis is
believed to have already garnered attention from Australia for the CBD
water product and enquiries about other “Made in Jamaica” medicinal
products. Inquiries have also come from several territories, including
Canada, Italy, Europe, and Ukraine.
It is not clear how many acres of lands CRD has earmarked for the venture
or where the cultivation will take place.
Founder and executive chairman of the Lasco companies Lascelles Chin,
while tight-lipped on the details, previously disclosed that the company
had secured land “close by” its White Marl facilities and should have
begun manufacturing the products in September.
Efforts by the Financial Gleaner to get an update on the project were
unsuccessful up to press time.
<< Back to news headlines >>
Kingston Properties gets voter approval for rights issue Sunday 7th August, 2019 – Jamaica Gleaner
Shareholders in Kingston Properties Limited approved a resolution to
increase the authorised share capital of the company as an initial step
towards raising funds via a rights issue.
The real estate investment trust wants to purchase commercial real estate
property in Jamaica and the Cayman Islands, while simultaneously
disposing of up to another five condominiums in Florida, currently up for
sale. The rights issue would finance the bulk of the acquisition. The deal
with open shortly and close in about six to eight weeks.
“We expect the rights issue to close by early October,” said Kingston
Properties CEO Kevin Richards in response to Financial Gleaner queries
following the extraordinary general meeting held at the Courtleigh Hotel
in New Kingston on Friday.
Richards declined to state the total amount of new shares or the price at
which these shares would enter the market. Roughly 64 per cent or 321.9
of 500 million authorised shares are in issue, which would require raising the
shares to 644 million to maintain that ratio.
“In two to three weeks we will make it public,” he said in response to a
query on maintaining the ratio.
All the dozen or so shareholders present, except for minority shareholder
Orette Staple, voted to increase the company’s authorised share capital
from 500 million to one billion shares. Staple agrees with the rights issue in
principle but argued that the rights issue should be priced at $1. Such a
move he argued would sufficiently increase the liquidity of the stock. The
top 10 shareholders, most of which are institutions, hold over 79 per cent
of the 321.9 million shares in issue. The stock traded at $5.68 on Friday or
not far from its 52-week low of $5.50. It hit a high of $8.45 in April this year.
Kingston Properties last executed a rights issue in 2015, which raised $650
million at $7 per share. Then in 2017, Kingston Properties executed a two-
for-one stock split.
Kingston properties earlier indicated that the new acquisitions will focus on
commercial real estate, including an undisclosed number of offices,
warehouse and industrial spaces to be financed by the proceeds of a
new rights issue. It will also reduce exposure to US residential properties.
The real estate company once owned 27 apartments in Florida, but
reduced that number to 18. That market suffered from an oversupply of
luxury condos.
The company holds $2.58 billion of investment properties, with its most
recent acquisition being the former Caldon Finance building in New
Kingston.
<< Back to news headlines >>
Maloney, TCL differ on final ruling Tuesday 6th August, 2019 – Nation News
EXECUTIVE CHAIRMAN of Rock Hard Cement, Mark Maloney, is expecting
the landscape for the cement industry to change for the better after
yesterday’s decision by the Caribbean Court of Justice.
“In recent months, Rock Hard Cement has absorbed the 60 per cent rate
of duty they were forced to pay as a result of the injunction that Trinidad
Cement Limited was awarded, but which has now been lifted. This marks
another significant victory for Rock Hard Cement in its ongoing battle with
Trinidad Cement Limited,” Maloney said.
“It is also a victory for all of those in the construction sector that have
benefitted from an almost 40 per cent drop in the price of cement since
Rock Hard Cement Limited started operations in November 2015. We
have to be relentless in our pursuit to achieve whatever it is we believe in,”
the Rock Hard boss said about the legal case.
<< Back to news headlines >>
Former MTW workers being paid Friday 2nd August, 2019 – Nation News
The 83 former Ministry of Transport and Works employees who were
retrenched during the first phase of the Barbados Economic Recovery
and Transformation (BERT) programme are smiling all the way to the bank.
That is because after months of negotiations they have started to receive
gratuity payments.
Wayne Walrond, the deputy general secretary of the National Union of
Public Workers (NUPW) told the Saturday Sun that the workers were
relieved and happy.
“The NUPW is extremely pleased that after making vigorous representation
of the 83 workers of MTW who had been retrenched after ten years and
more, several have started getting their gratuity payment. Some of them
advised us that they have seen money on their accounts and they are
very happy.”
<< Back to news headlines >>
China to unveil special tax policy in Shanghai Free Trade Zone Tuesday 6th August, 2019 - Reuters
China said on Tuesday it will implement a special tax policy in the newly
expanded Shanghai Free Trade Zone, in a bid to promote free trade as
Beijing’s year-long trade dispute with Washington threatened to escalate
into a full-blown economic war.
U.S. President Donald Trump sharply escalated the U.S.-China trade war
last week when he threatened 10% tariffs on the remaining $300 billion
worth of Chinese goods imported into the United States, starting Sept. 1.
China will also grant crude oil import licenses to qualified companies, the
State Council said in a statement on its website, adding that it will provide
preferential tax policies for firms operating in artificial intelligence, civil
aviation, semiconductor and biopharmaceutical sectors.
The State Council did not elaborate further on the special tax policies, but
Deputy Mayor of Shanghai Chen Yin later told a briefing that foreign
companies may not be charged customs duties for goods transiting or
stored in the zone.
The Shanghai government is working closely with the central government
to draft the details, Chen added.
Reuters reported on Monday that China is planning a pilot project to drop
all duties and ease procedures at its Shanghai FTZ, citing people familiar,
as Beijing looks to position itself as a leader in promoting free trade amid
its grinding trade war with Washington.
China has announced various measures over the past year to improve
market access as it looks to deflect criticism of its treatment of foreign
companies.
<< Back to news headlines >>
China state banks seen supporting yuan to steady declines: sources Tuesday 6th August, 2019 - Reuters
China’s major state-owned banks have been active in the yuan forwards
markets this week, sources said, using swaps to curb greenback supply as
authorities sought to slow the currency’s decline after its break past the
key 7 to the dollar threshold.
The move to contain the yuan’s decline comes after the Sino-U.S. trade
war broadened to include foreign exchange with Washington on Monday
branding Beijing a currency manipulator for the first time since 1994.
That pushed the offshore yuan CNH=D3 to a record low and the onshore
currency CNY=CFXS past the psychologically important 7 to dollar mark
for the first time in 11 years.
Four sources with knowledge of the matter told Reuters that state banks
were seen swapping yuan for dollars in onshore forwards market
CNYFWD= to support the Chinese unit.
“Yesterday big banks were all selling one-year onshore forward swaps,
then in the afternoon the spot dollar-yuan fell,” said a trader at a foreign
bank in Shanghai.
While China’s central bank had allowed the yuan on Monday to break
through key levels, authorities are keen to avoid a precipitous decline that
could trigger capital outflows and destabilize wider financial markets.
The sources said banks had conducted significant amounts of buy-sell
swaps in the onshore market on Tuesday. Buy-sell swaps help to reduce
the supply of dollars that the market can access to short-sell the yuan.
Analysts and market participants say major state-run banks often act on
behalf of the People’s Bank of China (PBOC) in the country’s foreign
exchange market.
“The central bank is guiding the yuan to depreciate in an orderly manner,
and therefore chances for a one-off sharp devaluation are low,” said Ken
Cheung, senior Asian FX strategist at Mizuho Bank.
He expects the PBOC will continue to use tools, including the daily
midpoint fixing, to lead the yuan’s movements in the near term.
One state bank also was seen active in offshore forward swaps, another
two traders at foreign banks with knowledge of the matter said.
State banks have previously used such tactics to support the local
currency. They were also seen selling forward dollars during the summer in
2018, pushing the one-year dollar/yuan swap points into negative territory,
which implies an increase in the yuan’s anticipated value against the
dollar in a year’s time.
One of the sources said while some of the recent swap transactions were
believed to be rollovers of last year’s purchases, other orders over the past
two days were new.
In the past, the PBOC would only target yuan liquidity in the offshore
market if it wanted temper the speed of currency moves. In late 2018, it
sold yuan-denominated bills in Hong Kong to manage currency
expectations.
“We believe China will manage the pace but not the direction of change
for the renminbi,” S&P Global Ratings said in a note. “More flexibility now
should mean lower volatility in the future but some smoothing may be
needed to anchor expectations and forestall large capital outflows.”
On Wednesday, one-year onshore dollar/yuan forwards CNY1Y= were at
175 points, down from 321 points on Monday, according to Refinitiv data.
One-year offshore dollar/yuan forwards CNH1Y= were at 459 points, down
from 640 points on Monday.
Such state bank transactions in the forwards markets helped slow the
decline in the spot yuan on Wednesday, although it was still weighed by
an escalation in Sino-U.S. trade tensions and the central bank’s move to
set its official midpoint at an 11-year low.
The onshore spot yuan CNY=CFXS was trading at 7.0425 per dollar on
Wednesday afternoon, down about 0.25% from Tuesday's late-session
close.
The offshore yuan CNH=D3 was trading at 7.0756 per dollar on
Wednesday afternoon, down from the previous close of 7.0538.
<< Back to news headlines >>
China's July forex reserves fall to $3.104 trillion amid rising trade tensions Wednesday 7th August, 2019 - Reuters
China’s foreign exchange reserves fall by $15.54 billion in July to $3.104
trillion, central bank data showed on Wednesday, as the yuan came
under pressure amid rising trade tensions with the United States.
Economists polled by Reuters had expected the country’s reserves, the
world’s largest, would fall by $18 billion to $3.101 trillion.
The fall in July - which was only the second monthly drop this year - was
due to changes in foreign exchange rates and prices of assets which
China holds in its reserves, the foreign exchange regulator said in a
statement after the data release.
China has been able to keep capital outflows under control over the past
year despite the bruising trade war with the United States and weakening
economic growth at home. Reserves have rebounded from an October
2018 low thanks to capital controls and rising foreign investments in
Chinese stocks and bonds.
But downward pressure on the yuan is building after the central bank let
the currency slide through the key support level of 7 to the dollar on
Monday and it tumbled to 11-year lows.
The U.S. government moved subsequently to label China a currency
manipulator.
The yuan has now weakened around 1.5% since U.S. President Donald
Trump threatened last Thursday to impose more tariffs on Chinese goods
from Sept. 1, though there are signs China is trying to stem the
declines.[CNY/]
The yuan fell 0.28% against the dollar in July, despite an agreement by U.S.
and Chinese leaders in late June to hold off on further punitive trade
measures while the two sides attempted to restart negotiations, which
had broken down in May.
China burned through $1 trillion of reserves supporting the yuan in the last
economic downturn in 2015, which also saw it devalue the currency in a
surprise move.
China had been intervening to support the yuan earlier this year as trade
talks continued, “but the fact that they have allowed the yuan to go past
7 shows they have sort of given up,” Capital Economics senior China
economist Julian Evans-Pritchard said on Monday.
“We want to see how long the yuan stays past 7 to see if this is just a
warning shot. If it stays past 7, it could weaken significantly further.”
Adding to the pressure, China’s economic growth slowed to 6.2% in the
second quarter, its weakest pace in at least 27 years, as demand at home
and abroad faltered.
Analysts expect July data releases over the coming week to show a
further loss of momentum, highlighting the need for Beijing to announce
more growth boosting measures.
DIVERSIFICATION
China will pursue the diversification of its foreign exchange reserves in a
steady, prudent way, the foreign exchange regulator said in late July.
For the first time, it released some broad data on its reserve holdings,
which have been a closely held secret.
Of China’s reserves in 2014, 58% were held in U.S. dollar-denominated
assets, down from 79% in 1995, the State Administration of Foreign
Exchange (SAFE) said.
It did not disclose information for years after 2014.
China has been ramping up its gold reserves this year.
It held 62.26 million fine troy ounces of gold at end-July, up 4.5% from
59.560 million ounces at end-2018.
The value of China’s gold reserves rose to $88.876 billion at the end of July
from $87.27 billion at the end of June.
<< Back to news headlines >>
India's central bank makes unconventional rate cut in bid to spur growth Wednesday 7th August, 2019 - Reuters
The Reserve Bank of India (RBI) lowered its benchmark interest rates for a
fourth straight meeting on Wednesday with a slightly bigger than
expected cut, underscoring its worries about India’s near-five-year low
economic growth pace.
The six-member monetary policy committee (MPC) cut the repo rate
INREPO=ECI by an unconventional 35 basis points (bps) to 5.40%, just
above a 25-bps cut predicted by 80% of the 66 analysts polled by Reuters
last month.
The RBI’s move came hours after the New Zealand central bank’s decision
to cut its rates by a steep 50 bps, and just before the Bank of Thailand
surprised the market by cutting its benchmark.
“With inflation projected to remain within target, addressing growth
concerns by boosting aggregate demand, especially private investment,
assumes the highest priority at this juncture,” Governor Shaktikanta Das
told a news conference.
Asia’s third largest economy grew at a significantly slower-than-expected
5.8% annual pace in the January-March quarter. And most analysts
expect data due later this month to show that growth in April-June
faltered even further.
SIGNAL OF CONCERN
The 35-bps rate cut is “a signal that the Reserve Bank of India’s MPC is
quite concerned with the growth outlook,” said Suvodeep Rakshit, a
senior economist with Kotak Institutional Equities in Mumbai.
Indeed, the RBI lowered its economic growth forecast to 6.9% from 7% for
the current fiscal year, and said it sees inflation remaining inside its target
range over a 12-month horizon.
Indian Finance Minister Nirmala Sitharaman, in a newspaper interview last
week, expressed that she would like to see a “significant” reduction in RBI
policy rates, in order to bolster a weak economy.
Asked about the unconventional rate cut size at a press briefing, RBI
Governor Shaktikanta Das defended the move, saying the MPC viewed a
standard 25 bps cut as being “inadequate in view of the evolving global
and domestic macro-economic” conditions, while a 50 bps cut was seen
as potentially “excessive”, given past RBI actions.
Analysts said they still see scope for rate cuts as inflation is likely to remain
muted.
“With softness in incoming data, we retain our call for another 25 bp cut,
likely in the next quarter,” said Radhika Rao, DBS economist in Singapore.
Earlier this week, Sitharaman said the government plans to take steps to
improve the state of the economy “fairly quickly” after getting inputs from
business leaders.
Das said the recent rate cuts in tandem with anticipated government
moves should lift sluggish economic growth.
Markets were little changed as the RBI decision was largely in-line with
expectations. The 10-year benchmark bond yield IN072629G=CC rose to
6.37% from 6.33% before the announcement, while the rupee INR=D4 was
barely moved at 70.84 per dollar.
Losses for India's benchmark NSE Index .NSEI increased after the rate
announcement, with it closing down 0.85%.
GETTING BANKS TO CUT RATES
Four MPC members voted for the 35-bps cut, while two voted for a 25 bps
cut, the RBI said. All members voted to keep the policy stance at
“accommodative”.
The MPC also cut the reverse repo rate INRREP=ECI to 5.15%.
With Wednesday’s move, the RBI has cut the repo rate by 110 bps this
year. Analysts say the real challenge remains getting India’s banks to pass
rate cuts to borrowers.
“The real issues are improving monetary policy transmission and reviving
the non-banking finance companies sector; the policy does not provide
any new measures or even perspectives on these areas,” said Sujan Hajra,
chief economist at Anand Rathi Securities in Mumbai.
State Bank of India (SBI.NS), the country’s biggest lender by assets, cut its
benchmark lending rate by 15 bps across all tenors shortly after the policy
announcement. Since the start of the year SBI has cut rates by just 30 bps
in response to RBI’s 110 bps cuts.
“Unless the transmission is swift and full, we may not see a change in the
consumption and investment trajectory,” Sandip Somany, president of
industry body FICCI said.
“It is equally important that the government front-loads its capital
expenditure program for the current year and continues to push ahead
with the reforms program”.
<< Back to news headlines >>
