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05th January 2010
FirstCaribbean Daily Markets Report
Monday, January 04th, 2009

Global Markets

• Pacific Investment Management Co., which runs the world’s biggest bond fund, is cutting holdings of U.S. and U.K. debt as the two nations increase borrowing to record levels.
• Harvard University economics professor Martin Feldstein said U.S. economic growth may falter this year because of a waning stimulus from federal spending and tax incentives for purchases of homes and autos.
• Europe's manufacturing industry expanded at the fastest pace in 21 months in December after a pickup in global trade.
• Chinese manufacturing expanded by the most in five years in December, supporting estimates that growth has accelerated to more than 10 percent in the world’s third-biggest economy.
• Japanese gross domestic product shrank to an annualized $5 trillion in the third quarter, without accounting for changes in prices, the lowest level since 1991. The tumble is unprecedented among the biggest economies since the 1930s, according to Paul Sheard, global chief economist at Nomura Securities.
• Crude oil rose for an eighth day, trading above $80 a barrel for the first time in seven weeks, as freezing weather and improving economic prospects around the world boosted the outlook for fuel demand.

Figure 1: U.S. Daily Economic Indicators

Caribbean Markets

Bahamas: A former finance minister has warned that The Bahamas’ debt-to-GDP ratio is likely to approach 55%.

Barbados: Barbados is projected to record a 10% increase in cruise passenger arrivals by the end of 2009.

Curacao: Venezuela’s government said Thursday that U.S. military counter drug flights out of Aruba and Curacao are violating its airspace in preparation for an attack. A U.S. official denied the allegation.The Daily Herald reports that tasks and personnel of the Central Government can now be transferred to the islands of St Maarten and Curacao in preparation for their status as counties within the Dutch Kingdom.
 
 
Grenada: Grenada's prime minister expects the Caribbean island's economy to shrink 1.8% in 2010 before returning to growth in 2011. GDP fell 7.7% in 2009 due largely to declines in construction and tourism. Prime Minister Tillman Thomas said in a New Year's message that the government now has access to previously unavailable funds from the World Bank, International Monetary Fund and European Union.

Jamaica: Jamaican equity markets saw mixed results in 2009 as economic conditions continued to deteriorate. On the JSE, there were 18 advances and 19 declines:
o Top performers: Ciboney (+100%), Jamaica Broilers (+56%), Pan Caribbean Financial Services (+51%)
o Worst performers: Hardware & Lumber, JMMB, and Berger Paints Jamaica with declines of 40% and above.
o The most liquid market in the region, the JSE saw trading activity fall by 28 per cent from 2.3B to 1.7B shares in 2009.

Trinidad: The 2009 Financial Year marked another tough year for local and regional investors.
• The main event in the financial market occurred in January 2009 when the region witnessed the collapse of the Trinidad-based CL Financial conglomerate. The Government was forced to intervene to prevent a financial crisis, pledging $5.4B to help with liquidity issues and the Central Bank took control of the Group. Consequently, Clico Investment Bank was dissolved and CMMB was taken over by First Citizens.

• The significant loss of revenue, particularly from the energy sector, led to a decline in activity throughout the T&T economy and three consecutive quarters of negative growth in GDP were recorded. The unemployment rate rose to 5.8% in the third quarter of 2009 from 3.9% at the end of 2008, while headline inflation declined to an 18-year low of 1.5% year-on-year in November 2009.

• The year saw a reduction in credit expansion as lending to both consumers and businesses fell-off. Loan loss provisions rose as banks assumed a higher percentage of loans would default.

Figure 2: Tracking key Caribbean financial indicators

DISCLAIMER- This document is for informational purposes only. This information is based on the close of the previous business day activity. The information presented is from usually reliable sources. FirstCaribbean has not independently verified the facts, assumptions, and estimates contained in this report. No representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, or completeness of the information and opinions contained in this report. FirstCaribbean International Bank accepts no liability for any loss occasioned by reliance on any information contained herein which may prove to be incorrect. For current market bids and offers, please contact: David Whitcroft, Treasury Sales & Trading, FirstCaribbean International Bank, Phone 246-367-2272 (Barbados), and Fax: 246-421-9207 (Barbados); david.whitcroft@FirstCaribbeanBank.com

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