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27th
July 2010
FirstCaribbean
Daily Markets Wrap Up – Friday, July 23rd,
2010
Global
Markets
• The U.K. economy grew almost twice as
much as economists forecast in the second quarter
as rebounding services, manufacturing and construction
ignited the recovery.
• European Union stress tests are set
to ignore the majority of banks’ holdings
of sovereign debt after regulators decided against
testing securities held in their banking books.
Lenders for example hold about 90% of their
Greek government bonds in their banking book
and 10% in their trading book, according to
surveys.
• Ford reported second quarter net income
of $2.6 billion, completing its most profitable
first half in more than a decade, as car buyers
paid more for newer models.
• BP plans to sell Alaskan, Vietnam and
Colombian assets in coming weeks to raise cash
to meet the costs of the Gulf of Mexico oil
spill.
• Junk bond sales have surged this month
as the UK economy expanded and German business
confidence unexpectedly surged to a three year
high.
Source Bloomberg--Caribbean Markets
Caribbean
• Trinidad and Tobago and Antigua and
Barbuda were the Caribbean countries most affected
last year by the global financial crisis, a
new economic survey has found. The cost of the
crisis to the Caribbean was estimated at 10%
of GDP, the United Nations Economic Commission
for Latin America and the Caribbean (ECLAC)
said at the launch of its Economic Survey of
Latin America and the Caribbean 2009-2010 at
its sub regional headquarters in Port of Spain.
o The survey found that GDP growth contracted
in all Caribbean countries in 2009 with the
exception of Belize, Guyana, Suriname and Montserrat.
o Stimulus packages in the region did not have
any significant effect because of deficits and
high levels of public debt, the survey said.
o Unemployment increased in 2009 for Trinidad
and Tobago, Aruba, the Bahamas, Barbados, Belize
and Jamaica. The Bahamas and Belize were the
most affected with unemployment spiking by at
least five percentage points.
o Growth prospects for the Caribbean remain
bleak in 2010 based on low commodity prices,
weak tourism receipts and threats to a robust
recovery internationally, the ECLAC survey said.
Barbados
• The $120 million government guarantee
that has kick-started the stalled Four Seasons
project is not enough to complete the mammoth
luxury facility according to Professor Avinash
Persaud who has been hired to lead the project.
o “The size of the Government guarantee
is not sufficient to ensure that the project
does not need any further financing. It would
have been ideal, from a private point of view,
if the guarantee was twice its size. However,
it would not be appropriate for Barbados. .
. .”
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Jamaica
• In local press reports, Jamaica’s
police chief has announced new crime-fighting
measures after a government attempt to extend
a state of emergency was foiled. Police Commissioner
Owen Ellington said they would include curfews,
security check points and aggressive road
policing.
• In the aftermath of the unrest in
May, Tourism Minister, Edmund Bartlett, announced
a major US$10 million marketing and promotional
initiative, targeting the traditional United
States, Canada and United Kingdom markets,
as well as emerging destinations in South
America and Europe. He contended then, that
the negative publicity generated, could lead
to a possible US$300 million loss in Jamaica’s
foreign exchange earnings, if effective and
timely damage control measures were not employed.
o However speaking at Wednesday’s Private
Sector Organization of Jamaica (PSOJ) Chairman’s
Club Breakfast Forum in New Kingston, Bartlett
said Jamaica is on track, this month, to possibly
repeat the over 190,000 visitor stopover arrivals
recorded in July 2009.
Netherlands Antilles
• Standard & Poor’s maintained
A- credit rating for Aruba. According to S&P
the rating is based on a well-run economy,
a stable democracy and a high extent of social
development. S&P indicated that the rating
is not higher mainly due to the fact that
the Aruban economy is not very diverse, and
the high national debt.
o “The confirmation of the credit rating
for Aruba reflects our expectation the economy
is recovering and our confidence in the steps
taken by the government to curb the deficits
in the care system and the pension system”,
says S&P credit analyst Joydeep Mukherji.
However, the bureau warns against the increasing
deficits and states it will possibly adjust
its ratings negatively, if this is not tackled.
o “We expect that the government debt
of Aruba will end up at approximately 48%
of GDP in 2010. This is higher than the average
of 38% for comparable ratings.” However,
they foresee economic growth due to the construction
of the Ritz-Carlton Hotel and the planned
re-opening of the oil refinery Valero.
According to S&P, structural changes are
required in the tax policy in order to comply
with increasing spending.
Trinidad
• Medium, small and micro enterprises
(MSMEs) contribute 15% to 18% only of T&T’s
GDP, according to Curtis Mayers, at the National
Entrepreneurship Development Company Ltd (Nedco).
“This is a very low per cent because
of the contribution of natural gas and the
petroleum sector which is more than 65% of
GDP. Of course, financial services contribute
significantly as well. “
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.
Discuss
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