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LOCAL FIXED INCOME REVIEWLOCAL MARKET REVIEW

FEATURES

WEEKLY MARKET ROUND-UP

All information contained herein is obtained by JMMB® Investment Research from sources believed by it to be accurate and reliable. All opinions and estimates constitute the Analyst’s judgment as of the date of the report. However, neither its accuracy and completeness NOR THE OPINIONS BASED THEREON ARE GUARANTEED. As such NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS OR COMPLETENESS OF THIS REPORT IS GIVEN OR MADE BY JMMB® IN ANY FORM WHATSOEVER. JMMBITT is a member of the JMMB Group and a registered broker dealer with TTSEC.

Local Equity Market Review

ISSUE NO. 68 5TH JULY, 2019

Last week, trading activity on the First Tier Market registered a volume of 1,050,512 shares crossing the floor of the Exchange valued at over $12,935,374.72. For the second consecutive week, GraceKennedy Limited (GKC) topped as volume leader with 403,660.00 units (38.43% of market activity) followed by Sagicor Financial Corporation Limited (SFC) with 182,979 units (17.42% of market activity). JMMB Group Limited (JMMBGL) traded in third place with 127,555 units (12.14% of market activity). Overall trading activity on the Trinidad and Tobago Composite Index resulted from trading in 22 stocks of which 8 advanced, 5 declined and 9 traded steady. GKC advanced 6.06% or $0.20 to close the week at its 52 week high of $3.50. Unilever Caribbean Limited (UCL) was in second place, with an increase of 4.08% or $0.98 to close at $24.98. Guardian Media Limited (GML) generated the largest decline of the week, down 2.27% or $0.25 to close at $10.75, its 52 week low. On the TTD Mutual Fund Market, 74,111 CLICO Investment Fund (CIF) units were traded with a value of $1,785,358.73, closing the week at a unit price of $24.09 (↓0.08%). Also, Calypso Macro Index Fund (CALYP) remained unchanged with a closing price of $14.17. On the Small and Medium Enterprise Market, CinemaOne Limited (CINE1) closed the week at $9.00. No shares were traded. Local indices weekly performances: � The Composite Index advanced by 0.64 points (↑0.05%) to close at 1,400.07. (YTD: ↑7.49%) � The All T&T Index advanced by 2.73 points (↑0.15%) to close at 1,779.53. (YTD: ↑4.32%) � The Cross Listed Index declined by 0.21 points (↓0.15%) to close at 138.16. (YTD:↑13.72%) �The SME Index by 0.00 points (0.00%) to close at 90.00. (YTD:↓10.00%)

The Indices ended the week in mixed territory. The Composite Index advanced 0.05% or 0.64 points to 1,400.07. The All Trinidad and Tobago Index climbed 0.15% to 1,779.53. The Cross Listed Index declined to 138.16, down 0.15% and the Small and Medium Enterprise Index ended at 90.00.

Find New Treasury Bill issues and local bond activity summarized below.

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2 JMMB INVESTMENTSMARKET ROUND-UP

Local Fixed Income ReviewBonds No Government Bonds were traded on the Trinidad and Tobago Government Bond Market last week. Corporate Bonds - NIF 2023 Bond was traded at a trade value of $10,020.00 and a last traded yield of 3.96%. - NIF 2030 Bond was traded at a trade value of $72,562.00 and a last traded yield of 5.43%. Liquidity The Commercial Banks closed last week with an excess reserve of $4.4 billion compared to $4.0 billion last week, up by $0.4 billion.

The Economic Commission for Latin America and the Caribbean (ECLAC) said economic growth across the Caribbean region is expected to increase slightly to 2.1 per cent this year. ECLAC launched its 'Economic Survey of the Caribbean 2019' on Wednesday and according to Trinidad- based ECLAC deputy director Dillon Alleyne, economic growth strengthened across the Latin America and Caribbean region in 2018. TThe ECLAC senior official said Trinidad and Tobago returned to positive growth, registering 1.9 per cent in 2018 for the first time in three years, largely driven by a recovery in the energy sector. 'In 2019, despite the effect of the oil refinery closure of the State- owned company Petrotrin in November 2018, growth is projected to be 1.6 per cent, supported by a new natural gas project and an increased implementation of public sector investment programmes.' Alleyne said the recovery in the energy sector has contributed to improved foreign exchange inflows, but the foreign exchange shortage is still acute. He said that the announcement of unsuccessful infill drilling by BP could also have negative impact on economic growth, but the Government is working to mitigate it. 'The recent downgrade by Standard & Poor's of Trinidad and Tobago's credit rating was driven by lower than expected energy production and economic growth as well as the delay in institutional reforms, but the credit rating remained in 'Investment Grade' with 'stable' outlook.' Growth trend Alleyne said weighted average real growth in the region rose to two per cent last year relative to -0.1 per cent in 2017 and that among the fastest growing economies were Anguilla (10.9 per cent), followed by Antigua and Barbuda (7.4 per cent), Montserrat (5.2 per cent) and Grenada (4.1 per cent). 'This growth trend is expected to continue in 2019, as economic growth across the region is expected to increase slightly to 2.1 per cent,' he said, noting that, in particular, average growth rate of the Organisation of Eastern Caribbean States (OECS) economies is expected to strengthen to 4.2 per cent in 2019, which is above the global growth rate of 2.6 per cent as well as the regional growth rate. ECLAC noted that the goods-producing economies are expected to post a growth rate of two per cent in 2019, down from 2.2 per cent last year, while the service-producing economies are expected to grow by 2.2 per cent up from 1.8 per cent in 2018. It said that the slightly weaker performance of the goods-producing economies can be linked to subdued global commodity prices. 'On the other hand, improvement in construction and tourism is expected to contribute to the better economic performance of the service producing economies. All of the 15 Caribbean economies assessed in the Economic Survey are expected to post positive growth in 2019 for the first time since 2007. 'More specifically, Dominica (9.9 per cent), Antigua and Barbuda (5.9 per cent), Grenada (3.3 per cent) and St. Kitts and Nevis (3.1 per cent) are expected to be the outstanding contributors to this positive forecast.'

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Local Economic NewsTrinidad Express Newspaper: ECLAC regional survey: T&T returns to positive growth - Antigua, Grenada among fastest-

growing economies

The Economic Commission for Latin America and the Caribbean (ECLAC) has predicted a 4.6 per cent growth for Guyana this year, even amid projections of continued decline in the regional economy due to an international context of greater uncertainty and complexity, and weak performance by investment, exports and consumption. This is the outlook of the annual Economic Survey of Latin America and the Caribbean 2019, announced on Wednesday by Alicia Bárcena, Executive Secretary of the United Nations regional organisation, at a press conference in Santiago, Chile. With a lucrative oil and gas industry on the horizon for Guyana, the country has been listed as the fastest growing economy in the world, with a projected growth rate of 16.3 per cent from 2018-2021. Guyana’s economy, with a Gross Domestic Product (GDP) of $3.63 billion, a growth rate of 4.1 per cent in 2018 and 4.6 per cent in 2019, is expected to further grow by 33.5 per cent and 22.9 per cent in 2020 and 2021 respectively. This is according to the NASDAQ Stock Market, which is an American stock exchange. It is the second-largest stock exchange in the world by market capitalisation, behind only the New York Stock Exchange located in the same city. NASDAQ said, with a per-capita income of $5,194, Guyana is a middleincome country and is covered by dense forest. It is home to fertile agricultural lands and abundant natural resources. Gold, bauxite, sugar, rice, timber and shrimp are among its leading exports. Back in 2000, the U.S. Geological Survey identified the Guyana-Suriname Basin as the second highest resource potential among unexplored oil basins in the world. According to the report, the Region will grow this year by just 0.5 per cent, a lower figure than the 0.9 per cent registered in 2018. This performance is attributed to the effects of a slowdown in sync with the global economy, which has meant an unfavourable international scenario for the Region. Likewise, the low growth internally is due to the lack of momentum exhibited by investments, exports and a fall in public spending and private consumption. Compared to previous years, the slowdown in 2019 will be generalised and affect 21 of the 33 countries of Latin America and the Caribbean. On average, South America is expected to grow by 0.2 per cent, Central America 2.9 per cent and the Caribbean 2.1 per cent. “The Region is facing an external context of greater uncertainty and growing complexity: less momentum from world economic activity and global trade; greater volatility and financial fragility; questioning of the multilateral system and an increase in geopolitical tensions,” indicated Alicia Bárcena. According to the Economic Survey 2019, fiscal space has been restricted by insufficient income levels to cover spending, which translates into deficits and an increase in debt in recent years. Moreover, the effects of the growing foreign exchange volatility and greater depreciation will limit the ability of central banks in the Region to deepen policies to stimulate aggregate demand, in addition to the fact that the structural conditions accentuate external vulnerability and do not help to spur growth (export structure focused mainly on primary goods and falling trend in productivity). According to ECLAC, policy space needs to be expanded to tackle the slowdown and contribute to economic growth, with measures in the fiscal and monetary areas, as well as in investment and productivity. In the fiscal arena, the survey cites the need to reduce tax evasion and illicit financial flows; promote the adoption of taxes related to the digital economy, environment and public health; and reassess tax expenditures to align them toward productive investment.

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Regional Economic NewsGuyana Chronicle - ECLAC predicts 4.6% growth for Guyana

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CNBC: Fed cuts rate by a quarter point, cites ‘global developments,’ ‘muted inflation’

The Federal Reserve lowered its benchmark rate by a quarter point Wednesday as an insurance policy not against what’s wrong with the economy now, but what could go wrong in the future. It was the first rate cut by the central bank in more than a decade. Amid President Donald Trump’s intense political pressure and persistent market expectations, the policymaking Federal Open Market Committee dropped the target range to 2% to 2.25% for its overnight lending rate, or 25 basis points from the previous level. In approving the cut, the FOMC cited “implications of global developments for the economic outlook as well as muted inflation pressures.” The committee called the current state of growth “moderate” and the labor market “strong,” but decided to loosen policy anyway. The stock market dove later in the afternoon when Fed Chair Jerome Powell noted that the cut was simply a “midcycle adjustment” and that the committee did not see the type of marked economic weakness that would necessitate a longer rate-cutting cycle. Balance sheet reduction ends The Fed also left the door open to future cuts, saying it will “act as appropriate to sustain the expansion” as it continues to evaluate the incoming data. “There’s a range of things that they’re looking at. Really, the low inflation allows the Fed some latitude to take preemptive steps and hopefully avoid moving in the future to something like negative rates,” said Mark Haefele, global chief investment officer at UBS Wealth Management. “Because they did only 25 basis points, they avoided doing what some would have felt was more shock and awe with 50 basis points. So they can move towards language like ‘data dependent’ now that they’ve shown they are prepared to be flexible.” The vote to cut also came with a move to end, two months earlier than planned, the reduction of bonds the central bank holds on its balance sheet. “This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain,” the FOMC’s post-meeting statement said. The rate cut saw two dissents, with Fed presidents Esther L. George of Kansas City and Eric Rosengren of Boston casting no votes, as many observers had expected. Trump had been looking for a 50 basis point cut, so it remains to be seen whether the easing will stem his ongoing criticism of Powell and his fellow policymakers.The quarter-point cut was widely expected. The initial reaction from the financial markets was muted with major stock indexes and bond yields remaining little changed. First cut since 2008 The move marked the first reduction in the funds rate since Dec. 16, 2008, as the U.S. economy was spiraling through a financial crisis that had threatened to crush the global economy. In that case, a sense of urgency over the depth of the downturn pushed the FOMC to take the rate from 1% down to a range of 0%-0.25%, where it remained for seven years. In making the move following this week’s two-day meeting, policymakers noted business investment that “has been soft” though household spending “has picked up from earlier in the year.”

International Economic News