CMMB Market Wrap

OECS Market
The recent IMF Article IV consultation with the Eastern Caribbean noted that there has some general improvement in growth rates and fiscal balances, but added that the ECCU authorities should strengthen and maintain economic policies to place debt levels on a downward trajectory and to achieve growth that is more sustainable.

Fiscal consolidation was highlighted, especially in anticipation of the 2007 Cricket World Cup, as most countries are planning to undertake substantial capital expenditure. The IMF further suggested that fiscal institutions be strengthened to improve the process of fiscal reform in the context of extremely high public debt levels. They suggested expansion of the tax bases, better expenditure & public debt management, and well prioritized public sector investment programs.

ECSE Report
We saw increased trading volumes on the ECSE for this week, a total of 5,071 shares traded, with 2 of the 9 stocks reporting movement in price. The East Caribbean Financial Holding Company (ECFH) advanced by 1% to $7.89, a price change of $0.04 over last week. The other stock to advance was the St. Lucia Electricity Services (SLES), reflecting a total share price increase of $2.00, a percentage enhancement of 14%. The St. Kitts Nevis Anguilla Trading and Development Company (TDC) and the St. Kitts Nevis Anguilla National Bank (SKNB) also traded, no changes in price were reported. There still remains unfilled demand for Grace Kennedy shares (GKC) at EC$4.25 and there are bids and offers on most other stocks. The significant movement in the price of the SLES stock has done miracles to the value of the ECSE All-Share Index which stood 106.11 by mid-week up 3.3% on last week’s close.
There were no new issues on the regional governments securities market this week. On the secondary bond market there continues to be no trading by investors but there remain demand for Government of St Lucia 10 year bonds at 101.80 and Government of St Vincent 10 year bonds at par (100).

Regional Markets
Regional markets were mixed for the period 30th August 2005 to 06th September 2005 with the Barbados and Trinidad markets managing to post marginally positive gains while Jamaica slipped back into negative territory. The TTSE Composite Index increased by 0.14% to 1,067.76 points over last week’s. The declines are still continuing to significantly outnumber the advances 14 to 4, but with stock prices so depressed, it is hoped that a turnaround will be soon forthcoming. Some of the major advances included Sagicor (10%), National Commercial Bank of Jamaica (7.78%) and National Enterprises Limited (0.55%). While the top declines were Readymix Limited (12.21%), Angostura Holdings (7.52%) and Agostini Limited (5.26%).
In Jamaica, in a complete turnaround from last week’s performance, all three indices posted negative returns. The largest fall was posted by the All Jamaican composite index which declined 1.14% followed by the JSE Select index (0.47%) and the JSE Composite Index (0.08%). The Advance: Decline ratio was 20 to 9 with 10 stocks trading firm. Despite the declines market activity continues to pick up with volume traded increasing by 26% to 31.8 million for the period under review.
In Barbados, the local index increased by 0.12% with three stocks moving. These included Barbados Shipping &Trading (-1.27%), Insurance Corporation of Barbados (10%) and West Indian Rum Distillery (30%).

International Market Performance
Crude oil prices dropped to below $65 a barrel, prompting consecutive days of gains for the US markets. The S&P Index ended the week under review up 2.07% while the Dow Jones was up 1.74%. European shares also made some solid gains during the week buoyed by a combination of weaker oil prices and a spew of good corporate earnings. The Euro Stoxx Index increased by 3.14%. In Asia, signs of a possible Japanese economic recovery would have helped to boost the equity markets. Japan’s Nikkei increased by 1.17% while the broader Hang Seng increased by 1.60%.

Other News
The notion that Trinidad and Tobago is entirely dependent on oil for economic gain is true, and this dependency is expected to continue over the long run to be the mainstay of the Trinidad economy. The natural gas markets contributed an estimated 26.3% of last years total GDP. Investment and exploration efforts continue to be significant, and Trinidad & Tobago is set to become an even more important energy producer over the coming years. Thus with international oil and gas prices at all-time nominal highs, the Trinbagonian revenue net should be full and bursting. However, it is important for the average citizen to understand how the world energy scenario affects Trinidad and Tobago, because of our level of dependence on this sector. After 2011, due to higher exploration and development costs associated with smaller and deeper gas deposits in the USA, prices are again expected to rise. New LNG ports are due to come on-stream in 2006, and LNG imports are expected to equal 6.4 trillion cubic feet in 2025. For Trinidad and Tobago, which already supplies up to 75 per cent of American LNG, and is set to increase output up to 50 per cent, this is a welcome sign. Higher output and prices of course convert to increased revenues to the state. The real economic challenge going forward is how much Trinidad will save as compared with what it spends.
Digicel, which already operates in St Lucia, has won government approval to acquire the operations of Cingular Wireless in St Lucia. The Irish mobile provider announced plans in June to expand its nine-country Caribbean network by acquiring Cingular’s operations in St. Lucia and four other countries. Digicel’s investment in the Caribbean totals more than US$600 million (euro500 million), and the mobile provider has said it expects to expand its staff by 30% by the end of 2006.
Disclaimer: All information contained in this article has been obtained from sources that CMMB believes to be accurate and reliable. All opinions and estimates constitute the Author’s judgment as of the date of the article; however neither its accuracy and completeness nor the opinions based thereon are guaranteed. As such, no warranty, express or implied, as to the accuracy, timeliness or completeness of this article is given or made by CMMB in any form whatsoever. CMMB and/or it employees or directors may, where applicable, make markets and effect transactions, or have positions in securities or companies mentioned herein. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer or a solicitation to buy or sell.