The Statistical Institute of Jamaica (Statin) reports that for March 2015 that inflation rose by 0.5 percent over the February which had a fall of 0.7 percent. The calendar year-to-date inflation rate is minus 0.6 percent. This is the first increase in the index after recording four consecutive months of decline”, Statin said.
Contributing significantly to this advance in the index was a 2.9 percent increase in the index for the Housing, Water, Electricity, Gas and Other Fuels due mainly higher rates for electricity. Lower prices for vegetables and starchy foods helped in moderating the increase with a small reduction in prices.
The divisions that recorded increases in prices are, ‘Alcoholic Beverages and Tobacco’ 0.3 percent, ‘Clothing and Footwear’ 0.4 percent, ‘Furnishings, Household Equipment and Routine Household Maintenance’ 0.3 percent, ‘Health’ 0.2 percent, ‘Transportation 0.7 percent, ‘Recreation and Culture’ 0.1 percent, ‘Restaurants and Accommodation Services’ 0.3 percent ‘, ‘Miscellaneous Goods and Services’ 1.3 percent, while ‘Education’, and ‘Communication’ each remained unchanged.
BOJ cut interest rate
The Bank of Jamaica’s 30-day Certificate of Deposit interest rate was reduced on Friday, 17 April 2015 Thursday to 5.50 percent from 5.75 percent, the central bank announced on Thursday. This is the first such reduction since February 2013, when the rate was cut by 50 basis points from 6.25 percent to 5.75 percent.
BOJ in its release stated, “this adjustment to the BOJ policy rate, reflects the Bank’s expectation that the rate of increase in consumer prices is likely to remain low in the coming year”.
“The recently announced inflation rate of 4 per cent for FY 2014/15 is the lowest in 48 years. The sharper than expected decline in inflation for the fiscal year was due in part to the fall in oil prices but also to the moderation in price increases that has resulted from fiscal consolidation and economic reforms. The impact of these changes will help to moderate inflation impulses over the medium term” the central bank concluded.
The reduction is also in line with a decline in Treasury bill rates over the past year, coupled with increased inflows of foreign exchange into the system that led to some amount of revaluation of the Jamaican dollar.
January remittances climb
Jamaica enjoyed a record haul in remittance inflows for the month of January with US$166 million garnered in January this year, according to data from Bank of Jamaica.
The flows represent an increase of US$8 million or 5.1 percent more than the amounts collected in January 2014. The growth in remittance inflows and a contraction in outflows resulted in net remittance inflows increasing at a faster pace than total inflows, with net remittances of US$147.4 million for January 2015, an increase of US$9.5 million or 6.9 percent over January 2014.
The gain in net inflows would have been occasioned by greater stability and availability of foreign exchange locally.
30 days interest rate rise
Interest rate increased for the latest Government of Jamaica Treasury Bills offering for April over the previous issue, in March this year, but by a relatively small amount of 0.04 percentage points.
The highest and lowest rates in the auction, suggest that investors expected rates to have eased rather than rise, with successful investors obtaining rates ranging from 6.1 percent to 6.74999 percent with an average rate 6.33979 percent, compared to the March auction with a high of 6.8 percent and a low of 6 percent and an average of 6.3 percent. Applications for $690,246,600 chased the $400,000,000 available on Wednesday, April 15 for Treasury Bills with a 30 days maturity of Friday May 15.
Will NCB pick up RBC Cayman?
Hot on the heels of an agreement to sell RBC Royal Bank (Suriname) N.V. (“RBC Suriname”), to Republic Bank in Trinidad, word reaching IC Insider is that Royal Bank’s operations in the Cayman Island is being sold.
The bank’s website shows three branches in that territory. IC Insider’s source informs us that Michael Lee Chin, Chairman of National Commercial Bank has been seen on the island frequently in recent times, but a comment from National Commercial Bank’s Cayman representative was numb when asked if his bank is buying the RBC operations, but there was no denial suggesting, strongly that NCB is a potential candidate.
RBC Canada stated when they announced the sale of the Suriname bank that “As we continue to focus our Caribbean operations on markets in which we can be a leading competitor for the long-term, we have made the decision to sell RBC Suriname to Republic Bank Limited,” said Kirk Dudtschak, executive vice-president and head, RBC Caribbean Banking. “This transaction supports the successful repositioning of our Caribbean business for the future and allows us to focus on markets where we can strengthen our operational capabilities and where we see opportunities for growth.”
Last year RBC sold the Jamaican operations to Sagicor Group after the entity lost billion of dollars and showed no sign of a turn around.
Big market move, up 1,680 points
The JSE main and junior market indices are up so far with only half an hours trading. The junior market is up 7.06 points to 722.57 as Caribbean Producers moved to $2.30 and General Accident was up 10 cents to $1.80.
The all Jamaica climbed 1,679.59 points to 93,862.37 as Carreras jumped 99 cents to $41 and Scotia Group is up $1.44 to $23 with 827,000 shares trading and Jamaica Broilers is up 25 cents at $4.50. Scotia Investments acting as broker, bought all of the Scotia Group shares that traded, with 700,394 units being crossed by them. It is the first for sometime, that the JSE has started so positively and with such level of trading at this stage of the day.
The bid is strong for Caribbean Producers with 598,000 units at $2.30, Scotia Group’s bid is at $22.50.
Jamaican economy grew 0.4% in 2014
Building under construction in Montego Bay contributed to economic growth in 2014
For the year Statin said that there was a 0.6 percent increase in the output of the Services industries while the Goods Producing industries declined by 0.1 percent. Growth last year was the second year of increased output for the economy with very moderate growth for 2013 around 0.2 percent. The figures will undergo at least two sets of revision before they are final as such the figures could be increased or reduced based on new data that may become available.
The Jamaican economy, grew by 1.6 percent in the first quarter of 2014, over the similar period in 2013. In the second quarter, growth accelerated to 1.9 percent, but a combination of drought conditions and negative impact of Chick v illness as well as closure of the oil refinery severely affected growth in the second half of the year, but more so in the third quarter. The economy declined by 1.4 percent in the third quarter of 2014 compared to the similar quarter of 2013 and growth in “the final quarter of the year resulted in 0.4 percent negative growth compared with the same period in 2013,” Statin said.
For the final quarter of 2014 the reduction in output was due mainly to a 3.9 per cent decline in the Goods Producing industries. The Services industries however, recorded an increase of 0.8 per cent, Statin stated.
GOJ should report 2015 deficit
Government of Jamaica is reporting a deficit of $39 billion on its operation to February, this year, just below the $40 billion projected and a primary surplus of $79 billion versus forecast of $83 billion.
With the budget for March this year indicating expectations for a surplus of $29 billion, the country should be seeing an overall deficit close to the $11 billion reflected in the 2014/15 budget. The primary surplus budgeted at $121 billion could end up around $116 billion unless there are extraordinary inflows or sharp cut in expenditure.
Overall revenues fell $12 billion for the 11 months while there were cuts of $9 billion in capital expenditure, wages $3 billion and interest cost almost $6 billion. PAYE delivered $3 billion more inflows than forecast and withholding tax performed better than forecast by $2.5 billion. Pulling down the revenues were Local GCT $7 billion, corporation taxes $7.5 billion.
Is end of quarter JSE rally on?
Jcakie Sharp CEO of Scotia Group that gained 45 cents on Thursday
Main Market| The JSE Market Index gained 865.46 points to 83,174.80, the JSE All Jamaican Composite index rose 967.61 points to close at 91,711.58 and the JSE combined index increased 800.44 points to 84,804.11.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator shows 14 stocks with bids higher than their last selling prices and 3 stocks with offers that were lower. The increased numbers, is suggestive of month end and end of quarter moves, by some investors or fund managers to get prices or values of certain stocks up to influence portfolio valuation, rather than a sustained higher interest in the market. Admittedly, the reading since March 18, has been strong with the number of higher bids ranging between 10 and 12.
Carreras gained 95 cents and is heading back above $40
Firm| The stocks in the main market to close without a change in the last traded prices are, Berger Paints trading with 7,496 shares at $1.61, Cable & Wireless dealing in 333,413 units and closing at 50 cents. Caribbean Cement had 30,000 shares changing hands at $2.25, Desnoes & Geddes ending trading with 7,728 units at $5.45 and while exchanging 2,320 units, closed at $6.40.
Declines|The last traded prices of stocks with losses, at the end of trading in the main market are, Jamaica Money Market Brokers, closing with 223,767 units, finishing 24 cents lower at $7.02, Mayberry Investments concluding trading with 11,829 units, 36 cents lower to $2 and Scotia Investments in trading 9,000 units, the price slipped $1 to $22.Preference| Proven Investments 8% preference share and closing with 1,000 shares traded with a gain of 45 cents to $5.50.
Another large sell off of US$
Dealers sold off a net of US$24 million on Thursday, with purchases of all currencies by dealers amounting to US$28,077,038 equivalent, compared with US$37,292,575, on Wednesday and selling of the equivalent of US$52,045,055 versus US$38,096,238 on the previous trading day.
Thursday’s sale is the second day for the week that dealers offloaded much more than they purchased, with net selling of $28.5 million on Tuesday.
In US dollar trading, dealers bought US$25,814,004 compared to US$35,114,776 on Wednesday. The buying rate for the US dollar slipped 10 cents to $114.51 and US$50,855,849 was sold versus US$36,632,413 on Wednesday, the selling rate edged up 1 cent to end at $115.11. The Canadian dollar buying rate rose 39 cents to $90.17 with dealers buying C$1,066,606 and selling C$586,764, at an average rate that fell 14 cents to $91.93. The rate for buying the British Pound declined 57 cents to $168.74 for the purchase of £878,391, while £380,175 was sold, at an average rate of $171.39, for an 81 cents increase. At the end of trading it took J$126.47 to purchase the Euro, 90 cents more than on Wednesday, according to data from Bank of Jamaica, while dealers purchased the European common currency at J$124.04 for a rise of 87 cents on Wednesday’s rate. Other currencies bought, amounted to the equivalent of US$128,765 while the equivalent of US$154,544, was sold.
Highs & Lows| The highest buying rate for the US dollar, fell 5 cents to $115.35. The lowest buying and the highest selling rates remained at $93.94 and $120.37 respectively and the lowest selling fell $1.85 to $93.94. The highest buying rate for the Canadian dollar dropped 50 cents to $92.70, the lowest buying rate remained at $72.46, but the highest selling rate rose 28 cents to $94.56 and the lowest selling rate climbed $2.10 to $89.40. The highest buying rate for the British Pound, gained 70 cents to $172, the lowest buying rate remained unchanged at $137.20 but highest selling rate climbed $1.73 to $176.87, while the lowest selling rate gained $1.40 to $166.70.