Inflation At 45 Year Low, Economic Confidence High & Main Event IPO

Here is the latest weekly digest (Jan 16th – Jan 22nd, 2017). A quick easy read of this week’s top and most relevant business news. No fluff, just the highlights.

National Highlights

• The Statistical Institute of Jamaica (STATIN) has reported that Jamaica’s inflation rate remains at a record low level, and was 1.7 per cent at the end of December. It’s the lowest inflation rate the country has seen in more than 45 years.

• New results are showing an increase in business and consumer confidence. The increase in business confidence indicates that Jamaica remains at record high levels for all four quarters 2016 than at any time over the last 15 years, according to just released data from the Jamaica Chamber of Commerce (JCC). The country peaked in the first quarter of 2016 when business confidence stood at an index of 144.6.
  • The recent increase in business confidence was attributable to the steadfast commitment of new Government policies and programmes which have assisted in producing renewed economic growth.
• Finance minister Audley Shaw says that Jamaica will save about US$100 million ($12 billion) from revamping the first phase of the Southern Coastal Highway. Phase 1A of the project linking Harbour View to Morant Bay was projected to cost US$500 million and an additional US$400 million under Phase 1B to extend the highway onward from Morant Bay to Port Antonio. The redesign, according to Shaw, will chop the first leg to about US$385 million and the second leg to US$200 million.
• Finance and Public Service Minister Audley Shaw has announced a seven month timeline for the completion of the Financial Sector Adjustment Company (FINSAC) report into the collapse of the financial sector in the 1990s. The FINSAC commission of enquiry began in 2009 to investigate the fallout of  businesses and livelihood of many individuals. The probe was, however, also shrouded in politics and spiralling costs, which led to its halt in 2012 with the change of political administration.


Companies & The Markets

• Main Event Entertainment Group has announced its initial public offering (IPO) at $2 per share to raise $120 million via the junior stock market. The offer opens on Tuesday January 24 but is already widely expected to be oversubscribed. The company is floating 60 million shares, only 6.6 million of which will be available for subscription by the general public. The rest will be apportioned to key entities and groups.
  • The proceeds will finance new equipment to allow Main Event to expand.
  • The offer is being arranged by financial adviser Mayberry Investments Limited.
  • If the offer is successful, it would be the third entertainment company to list on the junior market of the Jamaica Stock Exchange (the others are start-up music publisher C2W Music Limited, and casual dining outfit KLE Group Limited).
• Kingston Properties Limited (KPREIT) this week closed on a new property in Jamaica, a warehouse and office complex located on Spanish Town Road in Kingston. The property is leased to operators of manufacturing, distribution and logistics businesses. The property is the second added to the real estate management company’s portfolio since the start of the year. The combined cost of both properties is close to the US$4.5 million in loans secured in 2016 for expansion.
• Derrimon Trading Ltd (DTL) has issued a takeover offer for the remaining shares in Caribbean Flavours and Fragrances (CFF), advising that it has delayed final payment for shares of the company founders — a previously announced transaction — in order not to “upset the market”.
  • Further, DTL indicates that it does not expect its offer to be taken up by anyone but the principals of the company, Anand James and his wife Dr Joan James, who are reselling all of their remaining shares en bloc.
  • The offer comes with a sweetener in the form of an interest payment, which is a first for mandatory offers on the Jamaican stock market.
• Richard Lake, Chief Executive Officer of Restaurant Associates, says plans are underway for the opening of 10 Popeyes and Little Caesars pizza franchises across Jamaica by year end. The expansion is expected to bring employment to an additional 300 Jamaicans. They also intend to open an academy to boost both the educational and lifetime skills of its employees. There are currently 3 Popeyes locations.
• MBJ Airports Limited, operators of Sangster International Airport, expects passenger traffic to surpass four million this year, a forecast that takes more robust Cuba travel into account, at least for the moment. In 2016, just over 3.9 million passengers in 2016 transited through Sangster, or about 4.0 per cent higher year on year.

Here are some key market and economic figures

• Stock Market Movement: 0.83% Week-to-date | 2.02% Month-to-date | 2.02% Year-to-date (27.6% YTD 2016)
• Inflation: 0.3% December (Month) | 1.7% Jan – Dec 16 (YTD)
• Unemployment: 12.7% – Jul 2016 (13.7% as at Apr 2016)
• GDP: 2% – Jul – Sep 2016  (1.4% – Apr – Jun 2016) (Rate of Growth of Value Added at Constant (2007) Prices Seasonally Unadjusted)

Thanks for reading Vol. 2017 Issue No. 3 of our weekly digest. ( 16.01.2017 – 22.01.2017). All Weekly reviews can be viewed here.

Photo credit: hikingartist