Remittances on track to exceed US$3.5B

Remittances inflows to Jamaica surged to US$3.18 billion for the first 11 months of 2021 after pulling in US$274.5 million in November, an increase of 15.6 percent or US$37 million over the comparative period in 2020, data out of the Bank of Jamaica shows.
The performance for November puts the total intake for 2021 above the US$2.9 billion hauled in for January to December 2020. The outturn for 2021 seems set to exceed $3.5 billion for the year when the final numbers are tallied for December.
Based on the performance to date and the consistency of the monthly increase the 2021 inflows seem set to exceed by $1.1 billion the inflows of US$2.406 billion the country received in 2019 and just over $600 million more than the total for over 2020.
Data show Jamaica receiving around $2 billion more inflows in the last two years over and above the trend up to 2019. Between 2007 and 2019 inflows grew around US$1 00 million per annum, with no growth in inflows in 2015, 2017 and 2018. The increase in 2020 and 2021 broke the trend of low growth experienced since 2007.
Persons within the financial sector attribute the increased flows to a number of factors including many Jamaica who lives abroad buying real estate and contributing to the building boom in Jamaica others are of the view that the transfer of funds by the government’s fiscal stimulus to individuals, primarily in the United States is also a big contributor.

Jamaica’s interest rates holding for now

Zero inflation in December and prospects that low to negative inflation for the first four months of 2022 might have checked the move by the Bank of Jamaica to further engineer further increase in interest rates at this time.
At its latest Bank of Jamaica certificate of deposit (CD) auction, in the amount of $11 billion that was auctioned last Wednesday, January 4, the yield held, for the 30 day instrument, remaining the same as the out turn at the December 29 auction, at 4.13 percent, marginally lower than the rate in mid October.
Bids amounting to $21.53 billion were received covering 85 applications. There were 49 successful Bids with rates ranging between 4 and 4.2 percent. The highest bid was 5.5 percent for $1 million that was not successful.
Bank of Jamaica reduced the amount of CDS to $36.5 billion that is down from $46.5 billion at the peak late last year in mid-October, with the average rate at 4.17 percent.

Jamaica’s NIR jumps $104m in December

One signal of the health of a country’s international trade can be viewed from the performance of its net international reserves, based on this, the Jamaican economy could be in a pretty decent shape.
Jamaica has seen a bounce in remittances in the country climbing from just $2.4 billion in 2019 to $2.9 billion in 2020 and is expected to touch US$3.6 billion last year. In addition, tourism inflows have bounced back well in 2021, with preliminary data indicating that in December last year arrivals could be down 24 percent against that of 2019 before the disruptions in 2020 started, with all of 2021 down 45 percent on 2019. Bank of Jamaica reported that the country’s net international reserves rose US$104 million in December over November 2021 to close the year at $$4 billion and is up from US$3.1 billion at the end of 2020.

Jamaican economy looking good for investment in 2022

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Things are setting up nicely in the investment world for 2022, following two somewhat lousy years for the JSE Main Market that fell 22.6 percent in 2020 and rose a mere two percent in 2021, but technical reading is not very positive in the short term, but that is likely to change in the second half. The opposite is true for the Junior Market that is caught in a triangular formation that suggests a big break higher to take the market into record territory and most likely over the 4,000 index mark.
The genesis of such optimism is ro0ted in a number of positive developments in the wider economy and for some individual companies. Results of companies for the 2021 third quarter were some of the best seen for some time, with many doing better than in 2019, before the advent of the Covid19 that resulted in dislocation pressured the bottom line of many and for some opportunities that helped the topline and the bottom line.
Those developments bode well for profits and stock prices in 2022 when the economy is expected to recover from the sharp decline in 2020. Remittances for 2021 are expected to be over US$600 million more than for the record $2.9 billion intakes in 2020 and the tourism industry is expected to be back at 2019 levels or close to it but is expected to far exceed that in 2020 all things being equal. More growth is expected from exports and the BPO sector, accordingly, the country should see significant additional foreign exchange inflows in 2022 than at any time in its history. Bear in mind that the signal of how well the country is doing in international trade, the net international reserves rose US$104 million in December over November to close the year at $$4 billion and is up fromUS$3.1 billion at the end of 2020. The early signal of tourism performance shows December 2021 behind a similar period in 2019 by just 24 percent compared to a fall of 45 percent for all of 2021 versus 2019.
Unemployment will dip further in 2022 as most of the economy is expected back to near normal operations that will add to the spending power of Jamaicans and help to lift revenues.
In the financial sector, profits were on the mend and bankers are lending again with good growth taking place in the loan portfolio of some financial institutions.

Tourism expected end 2022 close to that of 2019

In 2021 banks and financial institutions with a few exceptions were pressured with the majority ending the year with a fall in price. These institutions will benefit from the rise in interest rates that will result in increased net interest income. The JSE financial index, a measure of the performance sector in 2020 down 6.5 percent for the year. The star performer was by far the Junior Market with gains of 30 percent with five stocks gaining between 95 and 266 percent.
In the second half of the year, inflation raised its head and the Bank of Jamaica hiked interest rates in response, so far there are no visible effects on the stock market, even as higher interest rates tend to negatively affect stock prices.
On the fiscal side, revenues for 2021 were healthy bettering the 2020/21 fiscal year b some distance. The effect is that the fiscal deficit should return to the 90 percent range again during 2022. Fiscal year 2022/23 should be much better and there could be some tax relief granted. It could be reduced GCT or an increase in the tax threshold. But it should stir the government into doing a comprehensive tax reform thus eliminating many of the minor tax categories. Whether there is tax relief or not, what is clear is that there will be no new taxes for the coming fiscal year.
In our 2021, ICInsider.com stated the period ahead, “seems set to be the year of surprises as many stocks that suffered badly in 2020 could be making a major turnaround in revenues and profit, while some that may not fully recover could start showing good signs of returning to normalcy.” That is exactly what happened during the year with strong gains from the likes of Caribbean Producers, Express Catering, Main Event, Medical Disposables, Radio Jamaica, Stationery and Office Supplies and Dolphin Cove, all of which suffered major setbacks in 2020.
The economy is clearly on the mend but there are still lingering concerns with the inability to seriously reduce the spread worldwide as well as in Jamaica. The latest Omicron strain is an example that we may not be out of the woods as yet. The ongoing vaccination of the population in Jamaica although not going as fast as planned continues apace and could support general positive expectations for the near term.
Importantly, PE ratios are rising as investor demand pushes values up as selling wanes at the end of 2021, the average PE ratio of the Junior Market suggests a 60 percent rise for the market while the Main Market is put at just 20 percent, with companies in the latter at a greater stage of developments than the former.
The country should see a full recovery from the important tourism sector during 2022 and this publication expects greater flows of foreign exchange with tourism back to normal and remittances holding close to the trend of 2021.

Coming soon – Junior Market could jump 60% in 2022

10 year tax holiday for T&TSE SMEs listing

Trinidadian companies are to benefit from a ten year tax concession to small enterprises that list on the Trinidad and Tobago Stock Exchange, similar to the concession granted to listings on the Jamaica Stock Exchange Junior Market that will result in tax free status for five years and half the tax for the second five years, effective 2022.

The information was contained in his 2022 national Budget presentation by the Minister of Finance, Colm Imbert, in which he announced the tax benefits for small and medium enterprises (SMEs) that are listed on the Trinidad and Tobago Stock Exchange (TTSE).
The incentives come into effect from January 2022 that will result in SMEs will be granted a full tax holiday for five years following a listing on The TTSE and a 50 percent tax holiday for the second five years following the listing, thereafter the standard rate will apply thereafter. These exemptions include Corporation Tax, Business Levy and Green Fund Levy.
Prior to the announcement, the tax concession, initially announced in 2011, that resulted in the tax rate being 10 percent and later increased to 15 percent in 2020, resulted in only two companies listing as a result, in contrast to Jamaica Stock Exchange Junior Market that has been a resounding success, with 46 companies attracted to it with more to come shortly. It is worth noting that Jamaica in 2016 was planning to abolish the incentive, fortunately, that did not happen as such the Junior Market continues to grow and helps to strengthen the economic base of the country.
In commenting on the imminent SME tax holiday, CEO of the TTSE, Eva Mitchell, praised the opportunities this opens up for both the companies covered by the benefits and the public who are eager for new channels for investment. “The country continues to operate under the restrictions and sustained economic blows imposed by the Covid pandemic. The SME sector has been hit extremely hard, and these new tax incentives provide welcomed relief. The fact that they are accessible via listing on the Stock Exchange encourages interest and investment for further growth from our stakeholders. The Stock Exchange is a closely regulated environment which supports public confidence and sustained participation.”

Continued improvement in tourist arrivals

Stopover visitor arrivals to Jamaica jumped 39.5 percent to 970,435 for the first nine months of 2021, from 695,721 in the first nine months last year and is 52 percent below the 2,020,508 stopovers arrivals in the first nine months of 2019.

Tourism is Jamaica’s bouncing back.

September quarter arrivals grew to 437,890 from 114,402 last year but are 30.5 down on the 629,825 in 2019, a significant improvement over the 45.6 percent drop in the June quarter over 2019.
Preliminary data show that the improvement in arrivals continued into October and November, with the latter figures suggesting that the decline against 2019 is now down to just 22 percent.
For Jamaica, stopover arrivals in September this year fell 30.4 percent to 100,654 from 144,583 in September 2019 but are 251 percent ahead of the 28,648 arrivals in September last year, shortly after the industry reopened to international visitors. Data from the Jamaica Tourist Board show that the September numbers are 34.4 percent lower than the 153,360 stopovers in August.
Unfortunately, the Jamaica Tourist Board continues the bad practice of not releasing arrivals numbers to the public on a timely basis. Accordingly, neither October nor November numbers are yet released. The tourist board should move to a two-pronged approach to releasing the data. First, they should provide the country with the arrival numbers and later release the report as they currently do.

Long term GOJ interest rates spike to 11% high

Investors garnered interest rates as high as 11 percent on long term bonds issued by the Government of Jamaica last week auctions of three long term bonds that were reopened and raised $10 billion. The average rates were more moderate, with the highest average being 8 percent.
The Government also offered $5 billion of the 10 percent bond due 2037 with a duration of 15.5 years. The auction attracted $6.759 billion that resulted in an average yield of 7.9614 percent. The lowest rate was 6.7 percent for $50 million and the highest success rate was 10 percent. The highest submitted bid was 12.999 percent. A total of 56 bids went after the bond, with 46 being successful.
The 5.675 percent bond due 2029, with a duration of 7.5 years, ended with an average yield of 6.3506 percent. The auction attracted $2.727 billion, of which $1 billion was allocated. The lowest rate was 5.575 percent for $100 million and the highest success rate was 6.94 percent. The highest submitted bid was 11 percent.  This instrument received 43 submissions, with only 18 being successful.
The 4.5 percent bond due 2025, with a duration of 3.5 years, delivered an average yield of 6.2329 percent. Bids from 51 applicants amounting to $4.779 billion chased the $4 billion on offer. Only 44 bids succeeded in getting allocated. The lowest rate was 4.5 percent for $44 million, with the highest success rate of 10.525 percent. The highest submitted bid was 11 percent covering $100 million.
The increased rates come against the background of recent moves by Jamaica’s central bank to hike rates and move towards an era of positive interest rates. Since making their intention known, the bank raised its overnight rate from 0.50 percent to 2 percent in September and November, while rates on 30 days CDs moved to 4.11 percent from 0.59 percent since the beginning of August and 2.15 percent at the September 22 Auction.

Jamaica’s remittances up again in October

Total remittance inflows climbed a respectable 8.8 percent for an increase of US$24 million to US$296 million, up from US$272 million in 2020.
The increase continues the robust growth remittance inflows enjoyed since May last year. It puts the total inflows for the year to date at US44 million short of the total intake for 2020, when US$2.905 billion was taken in for the year to the end of December. At the pace inflows have grown, the take for the current year could hit a record US$3.5 billion, data released by the Bank of Jamaica is suggesting.

BOJ CD rates holding steady

Fresh from hiking their overnight policy rate by 0.50 percent to 2 percent, Bank of Jamaica latest CD offer produced an average yield of 4.34 percent, with the lowest bid coming in at 4 percent.
BOJ offered to sell $9.5 billion of CDs and attracted twice that amount at $18.24 billion. The highest rate payable by the central bank is 4.475 percent, with only 44 percent of the amount of the bid being successful.
The previous CD auction held on November 9 attracted $17 billion for the $12 billion offered and resulted in an average yield of 4.22 percent, with the highest successful bidder getting 91 percent of the amount they placed in the auction with an interest rate of 4.65 percent.

Remittances jump 17% in September

Total remittance inflows in Jamaica jumped 17.2 per cent or US$44.8 million in September 2021 over the $260 million inflows for September 2020 and lifting the gross inflows for the year to date to US$2.6 billion, just US$300 million less than US$2.9 billion inflows for the 2020 calendar year.
The increase for the month is highly positive, in light of a strong 34.5 percent jump in September 2020 over the 2019 inflows for that month.
The total inflows for last year could be equalled or exceeded with the October numbers and could put the inflows for the year at US$3.6 billion by the end of the year. The numbers for September continues the robust monthly increase since last year May, except for a small decline of 2.4 percent in August this year. For the January to August 2021 period, remittance inflows to Jamaica grew by 25.4 percent to US2.3 billion, up from US$1.836 billion in 2020. Prior to August, inflows grew by 30.4 percent, with June and July being up 10 percent, well below 42 percent increase to May.

The data was obtained from the Bank of jamaica.