Market Cools Down, New Sagicor Boss & US Fed Raises Rates

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

The stock market closed down for a 2nd time this week. Meaning, it declined last week (by 2.5%) and then another 1.2% this week. This marks the 4th time the market has closed down for a week since January, while in the previous 3 months (Oct – Dec) the combined market index only declined twice. This confirms what we have been seeing daily where the rate of growth in some security prices and volumes have cooled down compared to previous months.

Some stocks facing declines this week include AFS (down 18.7%), PULS (down 18.0%), BPOW (down 16.5%), BRG (down 15.4%), CCC (down 13.6%) and CHL (down 10.2%)… which were all top performing stocks in previous weeks. The majority of these stocks however have already made significant gains this year. It’s obvious that investors have been capitalizing on the gains made during the bull run in previous months and taking their profit. Interestingly BPOW which is down -33.8% so far this month is still up 25.9% for the year after the decline.

On the other hand PURITY and KEX led the advancers this week with both being up over 20%. KEX hit a whopping high of $42.5 (and will consider a stock split soon). JAMT, AMG (check.. fresh off its stock split) and HONBUN are all up more than 15% this week.

On the macroeconomic side inflation for Feb inched up by 0.2% compared to January giving us a year-to-date inflation (Dec 16 – Feb 17) of 0.6%.

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

In other news…

The US Federal Reserve raised interest rates for the 3rd time since 2015 (twice in 3 months). With over 200,000 new jobs being created each month, unemployment below 5%, the US stock market at record highs and inflation getting closer to the 2% target – the federal reserve is trying to maintain stability in the market. Added to that, the prospects of tax cuts and infrastructure spending from President Trumps’ new plans, the Fed is basically saying the US economy no longer needs the support of ultra low borrowing rates. This may mean higher borrowing costs on US$ consumer and business loans. Watch this easy to understand video from CNN here. Also read.

As it relates to local companies…

Companies and The Markets

  • President and CEO of Sagicor Jamaica Richard Byles (Jamaica’s leading insurance company) will demit office April 30 after 13 years in that position, while Christopher Zacca (an outsider – albeit well experienced and educated – but with no known experience in insurance, the company’s core business) will assume that role on May 1. A month later, on June 1, R. Danny Williams will retire as chairman but remain a director of the group, at which time Byles will become chairman.
    • Sagicor Group Jamaica, under new executive leadership, will look to expand within the Spanish-speaking Caribbean while seeking out a wider clientele in Jamaica on expectations of future economic growth.
  • A new investment company, whose partners include well-known names in the business and investment community, has started on Lady Musgrave Road. The Financial Services Commission granted a dealer licence to start-up Sygnus Capital Limited on February 16. The outfit is headed by dealmaker Berisford Grey, who left his salaried job at CIBC FirstCaribbean Jamaica at the end of January for personal pursuits – which it now emerges was his own firm. Grey’s track record also includes a stint at Scotia Investments Jamaica Limited, and the team at Sygnus is heavily weighted with other talent that passed through that firm.
  • Proven Investments Limited will seek to acquire another sizeable entity within the Caribbean this year in what would be a new sector (transportation) for the company, according to group head Christopher Williams.
    • The company on Friday got regulatory approval from the authorities in St Lucia for its last acquisition, Bank of St Lucia International Limited (BOSLIL), a merchant bank which serves mostly wealthy clients in Panama and Uruguay.
  • Goddard Enterprises Limited sold its 25 per cent stake in Express Catering Limited, resulting in Margaritaville Caribbean Limited (MCL) taking full control of the Jamaica-based provider of airline meals. Express Catering supplies much of the food and beverage at the busiest airport, Sangster International in Montego Bay. This was confirmed by the latest MCL financial report released last week which shows that MCL paid out US$3.8 million (J$490 million) to acquire the minority interest in an unnamed entity.
  • Margaritaville Caribbean Ltd (MCL), which saw revenues fall in its second quarter due to the impact of bad weather on subsidiary operations, ended the period with EBITDA (Earnings before interest, tax, depreciation and amortisation) of US$37,700 compared to US$178,000 in the quarter of the prior year. Revenue for the second quarter ending November 30, 2016, was US$7.13 million, compared to US$7.78 million in the prior year’s quarter.
  • T. Geddes Grant Distributors and Seprod announced that they have become the first local companies to manufacture almond milk, arising from an expanded partnership with the American owners of the Naturally Almond brand. Almond milk is the fastest-growing non-dairy milk category in Jamaica (according to their market data), and they claim that top retailers are reporting 15 per cent growth year-over-year. This is driven by its appeal to the health conscious. Almond milk has 50 per cent more calcium than dairy milk. All of the almond milk in Jamaica is currently imported.
    • Seprod will make the product at its Serge Island Dairies plant, while T. Geddes will handle distribution. Both local companies are affiliated through the Musson Jamaica Group.
  • Barbados Prime Minister Freundel Stuart on Wednesday rejected a suggestion from former prime minister Owen Arthur that the island has no option but to go to the International Monetary Fund (IMF) for assistance in dealing with the ailing economy.
  • Derrimon Trading Company Limited, which already operates a grocery chain called Sampars, is about to launch another retailer to be known as Select Grocers. The first of the new stores opens this month in Manor Park, a move facilitated by Derrimon’s takeover of the operations of Carihome supermarket. It will cost more than $100 millon, including new refrigeration and deli equipment to get the first store started.

Here are some key market and economic figures

  • Stock Market Movement: -1.16% Week-to-date (-2.49% Last week) | MTD – 2.72% (Mar), 9.26% (Feb), 10.09% (Jan) | Year To Date 16.73%, 18.09% YTD Last Week (27.6% YTD 2016)
  • Inflation: 0.6%Dec 16 – Feb 17 (YTD) | 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. 11 of our weekly digest. (Mar 13th – Mar 19th, 2017). All Weekly reviews can be viewed here.

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