What Goes Up…? Plus, More Quarterly Results & Mass Merger Ahead

February 19, 2017

Here is the latest weekly digest (Feb 13th – Feb 19th, 2017). A quick easy read of this week’s top and most relevant business news. No fluff, just the highlights.

 

Market Review

For the first time since the start of 2017, the market closed down for 4 out of 5 consecutive trading days. It had some investors worried and other short term opportunists, riding the wave, were a little concerned as well. In fact, the biggest fall of the week, came on Feb 13th, the day before Valentines, and I hope it was not a heart breaking moment for you. To make matters worse, the 3,047 point drop in the combined index was the largest fall since April 2016 (when it last fell by 3,759 points).

The combined index pulled back from 251k points where it ended last Thursday to now closing at 246k points where it closed on Friday. Top losers this week were JP (down 23%), KLE (down 21%), JSE (down 21%), KEY ( down 17%), and believe it or not another 7 more stocks lost more than 10% this week.

On the bright side LASF, PURITY and GENAC are the only 3 stocks to have advanced for 10 of the 13 trading days in February.

Also, a number of companies released reports this week. PROVEN continues to do well and GENAC reported their 18th straight year of premium growth. Most of the other results were as expected. None overly exciting. KEY insurance remains a loss making company, and MDS was flat as they continue to invest in the business.

As always, you can see the full list of companies and their stock price performance since the start of the year here.

National Highlights

  • Mass Merger – 84 public entities are to be merged, closed or divested as part of the Government’s ongoing rationalisation of the public service. Finance and the Public Service Minister, Hon. Audley Shaw announced that there are plans for mergers in the betting and gaming industry with the Jamaica Racing Commission (JRC), the Betting, Gaming and Lotteries Commission (BGLC), and the Casino Gaming Commission to be subsumed into a Jamaica Gaming Commission.
  • Public Sector Transformation Project Continues (goes till 2020) – The Ministry of Finance and the Public Service will continue implementation of the Strategic Public Sector Transformation Project through a $887 million allocation in the 2017-18 Estimates of Expenditure, which has been tabled in the House of Representatives.
  • $2.4m (more) For Tax Reform – The Government will spend an additional $2.4 million this year to continue implementing the Jamaica Business Taxation Reform (JAMTAX) project.
    • Anticipated targets this year include: finalising the TCCS analytical report, which is expected to include SME taxation recommendations and disseminating these to stakeholders; conducting stakeholder focus group discussions on SME tax reform recommendations; and facilitating discussions with the RAD to address case backlogs.
  • Southcoast highway contract signed – Government officials travelled to the People’s Republic of China to sign an agreement for the construction of the southeast coastal highway project. The new highway will run from Harbour View in Kingston through Morant Bay in St. Thomas and on to Port Antonio, Portland.
  • New Inflation figures for January show only a slight increase in January’s inflation compared to December 2016. Inflation for January 2017 was 0.4% compared to 0.3% in December 2017.
  • The latest employment figures, reveal that the unemployment rate as at October 2016 was 12.9 per cent, which was 0.6 percentage point lower than the 13.5 per cent for October 2015.
    • Persons in the Labour Force at October 2016 totalled 1,355,500 representing a 30,100 (2.3%), increase over the 1,325,400 recorded in October 2015.
    • The number of persons employed in October 2016 was 1,180,800. This was 34,000 more than the 1,146,800, recorded in October 2015.

Companies & The Markets

  • PROVEN’s Profit Jumps – Growth from the securities trading, fees and commissions contributed to a 123 per cent increase in net profit for Proven Investments Ltd (PIL) for the three quarters ended December 31, 2016, with earnings of US$4.76 million compared to US$2.1 million earned in the same period last year.
  • VM Wealth Makes $1B Property purchase – A price of just over $1 billion was paid by Victoria Mutual Wealth Management (VM Wealth) — a subsidiary of the Victoria Mutual Building Society (VMBS) — for the acquisition of the Towers building in New Kingston. The acquisition was the first purchase by the investment firm through its new property fund which forms part of its unit trust offering.
  • Cemex on Monday announced the acquisition by subsidiary Sierra Trading of just under 70 per cent of the shareholding in Trinidad Cement Ltd (TCL) following the close of its take-over offer on February 7. Cemex SAB de CV now owns 69.83 per cent of Trinidad Cement Limited, through Sierra Trading, following the closing of its takeover offer in three regional stock markets. The takeover also gives the Mexican company majority ownership of the Caribbean Cement Company operation at Rockfort in Kingston.
  • The FSC and Liberty (which bought CWJ/LIME/FLOW) are still at odds as to whether a mandatory offer needs to be made to minority shareholders since Liberty now owns more than 70% of the company’s shares.
  • Caymanas Track Limited was officially divested and Minister of Finance and the Public Service Audley Shaw says that divesting Caymanas Track Limited (CTL) to Supreme Ventures Limited (SVL) signals many positive developments at the venue, including more income for the Government and its oversight agencies.
    • SVL will provide cash flow of more than $42 million to the operations of the JRC, not only for regulatory purposes but for development projects.

 

Here are some key market and economic figures

  • Stock Market Movement: -1.51% Week-to-date (6.86% Last week) | 9.00% MTD – Feb (10.09% MTD Jan) | Year To Date – 20.00%, 21.85% YTD Last Week (27.6% YTD 2016)
  • Inflation: 0.4% – Jan, 0.3% – Dec (Month) | 1.7% Jan 16 – Dec 16 (YTD)
  • Unemployment: 12.9% – Oct 2016 (12.9% as at Jul 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. 7 of our weekly digest. ( 13.02.2017 – 19.02.2017). All Weekly reviews can be viewed here.

 

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