At today’s auction of Certificate of deposits, Bank of Jamaica received 193 bids amounting to $18.33 billion for $12 billion in 30 days CDs of which 159 bids were successful at an average rate of 6.65 percent, down from 6.75 percent last week and just shy of the Overnight rate of 6.50 percent.
Today’s auction resulted in the total outstanding amount for the 30-day CDs of $131 billion, an increase from last week of $126 billion.
BOJ CD rate drops to 6.65%
October 2, 2024 by
The JSE bottomed & heading up
October 1, 2024 by
Sell in May and go away is an adage for many investors. It may sound glib, but it is based on years of solid experience, so investors should not take it lightly. Stocks do not move straight up and discount potential earnings fully in one big move, they do so over time.
At the close of September, the Junior Market closed 180 points or 4.9 percent higher and the All Jamaica index (AJI) is 6,990 points 2 percent higher than the August close and up over July. This is noteworthy as it conforms to the tradition in the local market with July being the start of the stock market year after the sell-off from May to June. This year the Junior Market bottomed in late August, with the AJI bottoming out in the first week in September although it seems to have hit a bottom in late August.
This year, investors are seeing lower inflation, a sharp cut in BOJ CD rates and more recently a cut in the BOJ overnight rate.
The rationale for the Sell in May and go away theory is that by the middle of May, the full year’s results and those for the majority of the first quarter are almost entirely released, resulting in investors positioning to have more or to sell. After mid-May, there is not much more price moving information is expected until late July when new developments start to come out or are expected. The lesson, it is best to buy stocks between May and late July but sell before the middle of May to get some of the best prices before the summer sets in.
Latest CD rate matches BOJ’s ON rate
September 29, 2024 by
Last week, the Bank of Jamaica received 251 bids amounting to $49.31 billion for an offer of certificate of deposits (CDs) amounting to $45 billion resulting in 220 successful bids.
The auction ended with an average yield of 6.75 percent, down from 6.80 percent at the previous auction held the prior week. The rate last week was similar to the overnight rate and may be an indication that BOJ will cut the overnight rate from 6.75 percent when they meet on Monday.
The total outstanding amount for the 30-day CDs on the settlement date of 27 September 2024, will be J$126 billion up from $122 billion the week before.
Rates on CDs have fallen dramatically from just under 12 percent in March this year as inflation has subsided sharply as well.
Bluedot seat count way off mark
September 29, 2024 by
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Bluedot latest polls positing a seat count of 33 to 30 is so way off the mark it is not worth paying serious attention, the actual polls numbers would compute to a heavy defeat for the PNP and if margin of error worked in favour of the PNP they would most likely lose the 2025 elections an analysis of the 2020 polls results show.
The latest Nationwide/Bluedot polls found that 31 percent of respondents would vote for the JLP, while 28 percent would cast their ballot for the PNP, within the poll’s margin of error of +/- 3 percent.
The pollsters described the JLP’s lead as “negligible”. “If the poll findings were held on election day, the balance in the parliament would be 33 seats for the JLP and 30 for the PNP.”
While the polls may be scientifically done, the same cannot be said for the seat count which is way off an outcome of the party standings. The above numbers translate to a 53/47 percent split in popular support on a head to head matchup.
Some realities are to be factored in when assessing general elections and determining seat counts. Just extrapolating the percentage of the poll will provide results that are far from accurate. General elections are not fought nationally but by winnable constituencies. As a result, political parties spend energy on seats they consider winnable. The result is that some seats end up not maximising votes as there is no competition to woo those voters. Past studies indicate that the PNP has about a 5 percent advantage in votes based on the constituencies they have commanding majorities. These need to be factored in if the overall poll numbers are used to assess the seat counts. The poll spit may be 53/47 percent, in reality it’s closer to a 55/45 percent split for the rest of the country.
A detailed examination of the 2020 election results show that if the parties were to hold the position as stated in the polls the JLP would end up with a commanding majority similar to their current position. ICInsider.com computed the results based on both parties having a 50 percent split in votes, effectively adjusting for the margin of error. The result is that the PNP would improve their seat count from 14 based on getting 47 percent of the votes to 20, with one so close it would effectively be a tie and overall 3 would be very marginal, and could go either way, five of the JLP wins would be very marginal and could also go either way. Effectively the PNP could end up with 26 seats if all the marginal seats end up in their camp rather than the JLP.
One thing to note, the polls were done at a time the PNP was preparing for their annual conference and the polls may well have picked up some sentiments relating to it.
Assuming the margin of error is biased towards the JLP and also against the PNP, the results would be PNP 31 percent and JLP 28 percent which translates to 52.5 percent for the PNP and 47.5 percent for the JLP. On the surface a clear win for the PNP. The seat by seat data shows a close election based on these percentages. Assuming all projected very close marginal seats are won by the PNP, they would most likely end up with 27 seats, including retaking all seats in Westmoreland and winning all but one in Manchester, still 5 short of a majority. Expect a bitter election campaign when it comes around.
Rollicking start for Jamaica Stock Exchange
September 27, 2024 by
Trading got off to a positive start on Friday, with the Main Index gaining 3,934.31 points to trade at 313,760.51, within the first thirty minutes of opening, the Junior Market Index added 58.13 points to 3,825.94 and the All Jamaican Composite Index jumped 5,245.95 to 358,759.75.
Since the early start, indices have pulled back a few points. Major movements were enjoyed by Cargo Handlers with a rise of 19 cents, Dolphin Cove is up 41 cents, Honey Bun gained 33 cents and Main Event lost 71 cents in the Junior Market. The lead movers in the Main Market include Berger Paints up 90 cents, Eppley with a rise of 34 cents, Guardian Holdings up by $2.69, Key Insurance rose 24 cents followed by Kingston Properties up by 25 cents, Margaritaville gained 93 cents followed by NCB Group up 99 cents and Scotia Group traded up 45 cents and JMMB Group fell $1.28.
Second monthly decline for Jamaica’s tourism
September 11, 2024 by
The best short term indicator of the health of Jamaica’s tourism sector can be gleaned from data released by Grupo Aeroportuario del Pacifico, operators of Jamaica’s two major airports showing a 9.4 percent drop to 424,600 passengers coming and going out of the island in August this year, from 468,600 handled in August 2023. The fall in August is far less than the near 14 percent decline in July.
At the same time, Kingston’s Norman Manley Airport, handled 1.8 percent more passengers in August this year, with 199,500 passing through the airport up from 196,100 in August 2023.
For the first eight months of the year, the Montego Bay Airport saw total passenger movements decline 0.8 percent to 3,610,300 in 2024 from 3,639,100 in the first eight months of 2023, while total passenger movements fell by 1.6 percent. Kingston’s Norman Manley International Airport had handled 1,189,300 passengers down from 1,208,100 in the first eight months of 2023.
The decline in arrivals will affect various linkage industries negatively with less business. These include farming, with products such as eggs, pork, chickens, vegetables, fruits, juices and liquor. Also affected are attractions such as Dolphin Cove, Dunns River Falls, ground transportation, water, electricity, workers’ wages and gratuities. This means less money will be spent in the communities impacted by tourism, while Government will collect less taxes from the sector.
More decline for interest rates
September 11, 2024 by
The auction of the latest Certificate of Deposit offering by the country’s central bank, saw 382 bids amounting to $53.35 billion chasing after the $33 billion offered by Bank of Jamaica of which 235 bids succeeded, resulting in an average yield of 6.93 percent, down from 7.03 percent last week.
At the end of the week, the country’s central bank will hold short term CDS of $120 billion, consistent with the holdings in recent weeks.
Murders drop 17% in Jamaica
September 10, 2024 by
The pace at which murders in Jamaica are now being committed is progressing at an accelerated lower rate of 17 percent for the year to date, compared to the similar period in 2023 and a reduction of 16 percent at the end of August and 14.5 percent to July 6, according to data released by the Jamaica Constabulary Force up to the end of the first week of September.
The report shows the period with 163 fewer murders than for the similar period in 2023 when 969 persons lost lives at the hands of criminals, resulting in 806 murders being recorded to date, holding the trend of less than 1,200 for the year.
Profit slows in Q3 at Scotia Group
September 9, 2024 by
Profit grew just 7.5 percent in the July 2024 quarter even as revenues climbed nearly 19 percent, to $5.46 billion from $5.07 billion in 2023 at Scotia Group, increased provisions for loan losses and lower gains from foreign exchange trading helped to reduce the quarterly profit. For the nine months to July, profit popped 11.43 percent higher to $14 billion from $12.56 billion in 2023.
For the July 2024 quarter, other comprehensive income pushed total profit to $6.4 billion for the latest quarter versus $5.5 billion in 2023 and to $9.15 billion for the nine months after accounting for negative other comprehensive income of $4.85 billion and $9.17 billion in 2023 after negative other comprehensive income of $3.4 billion.
Total revenues climbed 18.7 percent for the quarter, to $17.3 billion from $14.49 billion and at a faster pace than the 15.65 percent increase for the year to date to $50.7 billion from $43.8 billion in 2024.
Net interest income rose a solid 18.5 percent to $11.85 billion in the third quarter of this year, from the same quarter in the prior year of $10 billion. For the nine months, Net interest income jumped 18.3 percent to $34.2 billion from $28.9 billion in 2023. Net fee and commission income inched from $1.65 billion in 2023 to $1.68 billion in the July 2024 quarter and from $4.94 billion in the nine months to July 2023 to $5.11 billion in the current year.
Net foreign exchange trading gains amounted to just $2.28 million in the July 2024 quarter, down from $2.47 billion in the previous year. The nine months came in at $6.84 million compared with $6.49 billion. Insurance activities delivered profits of $602 million for the latest quarter, up from $478 million in the previous year. For the nine months, it moved to $1.66 billion from $1.5 billion in the comparative period in 2023.
Scotia Group increased loan loss provision by 344% in July quarter.
Credit impairment losses jumped sharply to $858 million in the July quarter, from $480 million last year, but less than the $1 billion in the April quarter and $2.89 billion in the nine months, compared with $1.66 billion in 2023.
The various segments had mixed results for the nine months to July, with the Treasury banking generating a robust 29 percent increased revenues of $11.77 billion, up from $9.1 billion in 2023, with net results of $2.9 billion in 2024 compared with $2.64 billion in the prior year’s nine months to July. Retail Banking enjoyed a 12 percent increase in revenues to third parties of $16.8 billion contributing segment results of $2.64 billion, down from $3.4 billion from revenues of $15 billion in 2023. Corporate and Commercial banking had an 11.6 percent growth in revenues to $11.72 billion from $10.6 billion in 2023 with net segment results surging 25 percent to $10.5 billion in 2024 from $8 billion in 2023.
Investment Management had a moderate decline in revenues to $2.3 billion from $2.38 in 2023 and net results of $1.25 billion in 2024, down from $1.3 billion in 2023. Insurance Services delivered revenues of $3.25 billion in 2024, net results dropped to $3.2 billion compared with revenues of $3.48 billion in 2023 with net segment results of $3.1 billion.
Staff cost rose 12.5 percent to $2.97 billion from $2.64 billion and grew 12.8 percent to $8.88 billion for the nine months from $7.87 billion. Other operating expenses rose moderately to $3.4 billion in the quarter from $3.3 billion and inched up in the nine months from 9.7 billion to $10 billion. Total operating expenses increased by 11 percent to $7 billion from $6.39 billion for the latest quarter and 8.3 percent to $22.56 billion from $20.82 billion for the nine months to July.
Audrey Tugwell Henry Scotia group’s CEO
Loans, the most important contributor to income, grew 13.54 percent from $256.85 billion in July 2023 to $291.64 billion in 2024. The growth rate in the July quarter is consistent with that for the full year and should pick up with rates on Bank of Jamaica CDs now at the 7 percent level and well off for the peak earlier this year of nearly 12 percent. Investment securities moved by 12.7 percent from $157 billion to $177 billion this year. Customer deposits grew 6.4 percent to $472 billion. Shareholders’ equity ended the period at $132 billion, up from $113 billion at the end of July 2023, partially aided by reduced losses on investment securities from $3.2 billion to $687 million.
Earnings per share for the quarter were $1.75 and $4.50 for the year to date. IC Insider.com computation projects earnings of $6.50 per share for the fiscal year ending October 2024, with a PE of 6.6 times the current year’s earnings based on the last traded price of $43 on the Jamaica Stock Exchange.
The Group will be paying a dividend of 45 cents per share in October, an increase from 40 cents since last year, October and brings the total payment to $1.65 versus $1.45 for the similar period to October last year, for an increase of 13.8 percent.
Scotia Group is graded ICInsider.com BUY RATED with the stock currently severely undervalued, with good growth prospects going forward that will deliver an increasing flow of dividend income.
Scotia Group hikes dividend
September 8, 2024 by
Scotia Group increases dividend payment by 12.5 percent to 45 cents per share, to be paid in October. The payment brings to $1.65 the amount paid per share for the year to date amounting to a total of $5.134 billion.
The group increased the dividend payment to 40 cents in October last year, from 35 cents in July 2023. The increase is in line with profit for the nine months to July. Based on historical trends, the increase is consistent with payments of 45 cents per quarter until July 2025 with a likely increase in the October payment. That would put the dividend yield at more than 4 percent at $1.80 per annum.
Scotia reported earnings per share of $1.75 for the July quarter and $4.50 for the nine months to July, the dividends represent a pay out ratio of 28 percent versus 27 percent for 2023.
