In early trading on the Jamaica Stock Exchange, Cable & Wireless was the most active stock trading with more than 9.6 million shares changing hands.
Investors stepped up and bought the stocks as high as 64 cents at the opening of the market, inducing sellers to enter the market at lower levels, pushing the price back down to 54 cents. Increased offers are currently posted for 4.45 million units between 58 and 65 cents. Bids to buy, remain mostly in the low 40 cents region.
Elsewhere Grace traded 1.3 million shares as high as $62, the price is up $3.90 from Tuesday’s close and National Commercial Bank traded 4,848 shares at $17.50 up by 50 cents. Carreras fell 99 cents with 17,680 shares trading, to $35.
The price movements helped to push the All Jamaica Composite index up by 283.67 points, to 80,722.91 at 10.30.
Heavy trading in C&WJ shares
Record take – Jamaica’s remittances
Jamaica enjoyed record inflows of remittances, between January and July this year. The critically important flow of funds, reached $1.238 billion, representing an increase of US$47.6 million or 4 percent to be the highest inflows ever, according to the latest data on remittances, released by the country’s central bank.
The 2014 inflows, bettered the previous high of US$1.195 billion, in 2012 and the next highest, $1.192 billion in 2008. Net remittances for 2014 to-date, is US$1.109 billion, a growth of US$61 million or 5.8 percent relative to 2013. The out-turn for the period reflects an increase in gross inflows and a reduction in outflows.
Net remittances for July this year were US$160.5 million, an increase of US$10.9 million or 7.3 percent over the July 2013. The growth in net remittance inflows reflect an increase in gross remittance, which was partially offset by an expansion in remittance outflows.
Gross remittance inflows for the month were US$183.2 million, an increase of US$12.6 million or 7.4 percent compared to July 2013.
C&W trades 1m units at 54c
Cable & Wireless traded 1 million units at 54 cents as Scotia Investments sold the stock which was bought by NCB Capital Markets.
The trade leaves 275,995 units on the bid at 54 cents, just below are bids for 600,000 sahres at 50 cents, 1,064,000, 27,360, 300,000 and 2,975,000 units at 47 cents. the closest offer is 500,000 units at 60 cents.
The stock has gained 93 percent since it last traded on Wednesday last week at 28 cents, after Cable & Wireless Plc announced the acquisition of Columbus Communications and that the local company added 125,000 cell customers between April and September.
30% is New Circuit Breaker
Marlene Street Forrest – General Manager of the JSE
At 37 cents, the price moved just over 15 percent, which is 0.20 cents from maximum of 36.80 cents possible. The stock exchange does not trade stocks in Jamaican dollars for fraction of a cent, do not round up the figures, in computing the 15 percent limitation. On Monday, the stock could not trade above 41 cents, which is 15 percent above Friday’s bid of 36 cents, even as there were investors prepared to buy above this level.
Later this month, could be as early as next week Monday, the 15 percent restriction will give way to a new regime of 30 percent in one day but in two tranches of 15 percent each, one hour apart. The rules will still permit the bid to exceed the closing price or the offer to fall below it at the close, thus permitting the stock to trade at more than 15 percent from the closing price, on the next day.
According to information from the Jamaica Stock Exchange, the new rule is as follows, “No stock should trade +/-15% from the close price or the effective close price at the opening of the market. The effective close price is determined whenever the closing bid is greater than the close price or whenever the closing ask is less than the close price. Use the closing bid as the effective close price, if the value is greater than the close price or use the closing ask as the effective close price, if the value is less than the close price. However, during the day if the Circuit Breaker is triggered for a security, the security will be halted for an hour to allow for the release, circulation and absorption of any relevant market news and a cool down period while investors consider their options. After the hour has passed the security will be released for trading and the new reference price, which is a simple average of the trigger price and the close price, will be used to determine the trade range for the remainder of the day. The price of the trade that triggered the Circuit Breaker should not be +/-15% outside of the original prescribed price band. The stock will not be allowed to trade +/- 15% of the new reference price.”
IC Insider spoke with the General Manager of the exchange who advises that the plan is to start as of Monday November 17th. But certain technical challenges with the trading platform could delay its implementation. Until the beginning of December.
The change came after investors were surveyed of the Stock exchange recently. The circuit breaker was implemented in the 1990s based on complaints by some investors about large swings in the price movements of some stocks, which was felt by some as manipulation of the market. The rule did not find favour with a number of the players in the market for several years.
C&W bid at 41 cents for 4.2m shares
Investors raised the bid on Cable & Wireless to 41 cents to buy 4,225,650 units in premarket opening.
The 41 cents bid price, is the highest the stock can trade at today. The lowest offers to sell are at 50 cents for 230,894 units.
Below the highest bids are buying at 40 cents, 39 cents, 37 cents then 36 cents. The total bids between 41 cents and 36 cents amounts to 9.94 million units.
Cable & Wireless Plc acquires Flow
Cable & Wireless Communications Plc (“CWC”) today announces that it has agreed terms to purchase 100 percent of the equity of Columbus International, a privately-owned fibre based telecommunications and technology services provider operating in the Caribbean, Central America and the Andean region, for USD1.85 billion.
“The move will significantly enhance CWC’s growth profile and accelerate the progress towards each of its strategic goals unveiled in May. CWC also announced the placing of new shares constituting approximately 9.99 percent of CWC’s outstanding share capital which will be used to finance in part the proposed acquisition. The Enlarged Group is expected to generate significant operating cost and capital expenditure synergies, with additional revenue benefits also available. The transaction will be earnings neutral in the first full year post-completion and materially earnings enhancing in subsequent years” CWC directors stated in their release.
Columbus is a privately-owned diversified telecommunications and technology services company, based in Barbados, with approximately 700,000 residential customers in the Caribbean, Central America and the Andean region. In the Caribbean, it is one of the leading providers of triple-play cable TV and broadband enabled services over its proprietary fibre optic network infrastructure. Through its wholly owned subsidiary, Columbus Networks, Columbus provides backhaul connectivity to 42 countries in the region, as well as capacity and IT services, corporate data solutions and data centre services throughout the Caribbean, Central America and the Andean region. Columbus also provides next generation connectivity and IT solutions, managed networking and cloud-based services under the brand Columbus Business Solutions.
For the year ended 31 December 2013, Columbus had revenue of USD505m with EBITDA of USD216m and total operating profit of USD104m. For the six months ended June 2014, Columbus had revenue of USD284m with EBITDA of USD118m and total operating profit of USD48 million.
Scotiabank Canada to cut 1,500 jobs
Scotiabank Canada is to cut 1,500 positions worldwide and take a profit hit in fourth quarter of its 2014 fiscal year, ending in October. About two thirds of the cut will come from its Canadian operation and according to Yahoo.com will result in a charge of $340 million against 2014 profit.
Despite the charge, profit outlook remain good for 2014 and beyond, but the move is as a result of general weakness of Caribbean economies, sporadic use of branches, weekly and bi-weekly, instead of consistent daily use. The sporadic branch use will result in branch closures, mainly in Caribbean and Mexico. The bank’s foot print in Mexico are many, BNS management said, but the branches to be shuttered lack traffic, which means the bulk of the branch closure will occur in this country. The bank says they will be moving to use more ATMs and internet banking facilities, in place of the physical branches.
The BNS has written down its investment in the economically challenged Venezuela, reducing it to only $50 million.
What is known is that the Caribbean region has suffered considerably from the economic downturn experienced since 2008. The operations in Jamaica has seen profit stagnated in Jamaican dollars and slipped in Canadian dollars as the Jamaican dollar was devalued. Profits stagnated in Trinidad banking subsidiary, as well. Loan demand has not been robust within the region either, and the absence of a meaningful pick up in this critical area will result in a drag on profit growth, as long as that remains the case. The sharp fall in the price of oil is going to place pressure on the twin island state of Trinidad and Tobago and by extension some of the other territories that may be dependent somewhat on business out of Trinidad. This latest development could be negative for Scotia’s Trinidad operation. Compounding the problem for Scotia, is that Jamaica that has started enjoying moderate growth that could lead to increased private sector loan demand, is faced with lower demand for government funding, as the government moves from deficit financing to one of surplus.
Is employment really up?
The employment numbers rose 16,700 (1.5 percent) to reach 1,124,600 persons, in June this year compared to the same time in 2013, according to data just released by Statistical Institute of Jamaica (Statin), but is down from March this year, with the data showing 1,133,000 persons employed at that time, and the unemployment rate at 13.6 percent.
“The Employed Labour Force this year June, is more than the 1,107,900 recorded in June 2013”, Statin said.
The latest data brought the Employment Rate for June 2014, to 86.2 percent of the work force, a 1.6 percentage point increase, compared with 84.6 percent in June 2013. The Employment Rate increased for males, by 1.8 percentage points, moving from 88.3 percent to 90.1 percent, and for females it increased by 1.5 percentage points, from 80.1 percent to 81.6 percent.
The unemployment rate stood at 13.8 percent at mid 2014 compared to 15.4 percent at the same time in 2013. Overall the number of unemployed persons decreased by 22,200 (11.0 percent) moving from 201,600 persons in July 2013 to 179,400 persons in July 2014, the report stated. But the number of persons who were classified as Outside the Labour Force in June 2014 was 778,300, an increase of 10,400.
There are seasonality in the data for employments making it a bit difficult to compared successive quarter with each other. It is expected that the Christmas quarter with increase business activity and the first quarter of the year with increased tourists arrivals and sugar production tends to have more persons employed than for the other periods of the year.
Who got jobs?| “There were significant increases in employment in the Occupation group ‘Professionals, Senior Officials and Technicians’ which increased by 14,000 persons (5.9 percent), moving from 239,400 in July 2013 to 253,400 in July 2014. Increases in employment were also observed in the group, ‘Elementary Occupations’, which increased from 142,100 persons in July 2013 to 147,900 persons (4.1 percent) in July 2014. The group ‘Craft and Related Trades Workers’ had the largest decline for the period, moving from 141,800 in July 2013 to 136,300 in July 2014 resulting in a decline of 5,500 (3.9 percent) persons,” Statin stated.
Statin went on to say that “the largest increase in the number of employed persons, were for persons in the group ‘Hotels & Restaurants Services’ that increased by 7,800 (10.4 percent) persons while ‘Education’ increased by 5,000 (7.4 percent) persons. The group ‘Real Estate, Renting &
Business Activities’ declined from 69,900 in July 2013 to 64,400 in July 2014 resulting in a decline of 5,500 (7.9 percent) persons.
PAYE gains can’t cover corporate shortfall
PAYE collections, outperformed forecast for September, by $620 million and $677 million, for the six months to September, this year, but that was inadequate to cover the $2.5 billion drop in corporate taxes, in the latest month, for government of Jamaica revenues.
At the end of August, corporations paid over $6.63 billion versus a projection for $8.8 billion, resulting in a shortfall of $2.18 billion, by the end of September, what should have been collections of $15.3 billion turned up to be only $10.65 billion, $4.7 billion short, resulting in a $2.5 billion shortfall, in the latest month alone. The underperformance for company tax collection, was the main reason why the revenue forecast of $156.5 billion for the six months period, suffered an increased shortage of $1.4 billion in tax revenues, bringing the year to date shortfall, to $7.33 billion. Overall revenue shortage, amounted to $7.13 billion, as grants fell short by $337 million in September, but non tax revenues outperformed forecast, by $400 million for the month.
Expenditure| Payment for expenses is well below target, as capital expenditure almost crawled to a halt in September, with only $590 million spent, raising the underspending for the year to date to $7.8 billion, up from $5.38 billion at the end of August. Programmes saw savings in payments of nearly $900 million, in the month, and wages and salaries was $350 million more, in the month, than planned, but there is still a reduction year to date, in this area.
At the end of September, the fiscal deficit of $18.95 billion was ahead of target by $6.3 billion, as the capital programmes have once more taken the bulk of the hit, as revenues fall short of target.
Drop in export pushes up Jamaica’s trade deficit
Jamaica’s trade deficit during the first seven months of 2014, deteriorated compared to the same period last year. The worsening position occurred as a result of a sharp fall in non-traditional exports, rather than increased imports.
The deficit ended at US$2.613 billion, compared to US$2.573 billion in the comparable period for 2013. The deterioration flowed from merchandise imports during the 7 months, valued at US$3.47 billion, decreasing by 2.4 percent or US$86 million, compared to the $3.55 billion recorded in the similar 2013 period. On the other hand, exports for the 2014 period, amounted to US$852 million, a decline of 12.9 percent or US$127 million below the US$979 million earned in the similar 2013 period.
Imports| According to the Statistical Institute of Jamaica (Statin), the decline in imports was largely influenced by lower spending on importation of Mineral Fuels, Chemicals, Beverages & Tobacco.
Exports fall| During the first seven months to July, traditional exports earned US$453 million, falling by 5.3 percent or US$25.6 million below the exports earnings during the 2013 period. Non-traditional export earnings from January to July 2014, fell by US$91 million or 20.2 percent, to US$360 million.
