Canada has become the first country to approve the use of the Pfizer Inc. vaccine for children as young as 12. Also, the U.S Chief Medical Advisor has now advised that the country is likely to issue emergency authorization for the use of the shot on children in the near future.
An ETF is a type of investment fund which tracks an index, sector, commodity or asset group. It can be purchased or sold throughout the day on stock exchanges. ETFs can contain a variety of investments including commodities, stocks or bonds.
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For the month ended April 2021, the TT Composite Index declined by -0.86%, led downwards by the Cross Listed Index which decreased by -2.8%. The share prices of NGL and AGL decreased by -10.8% and -6.7% respectively as investors lacked confidence in a local economic recovery. Over the month GKC and AHL reported improved profits whilst FIRST reported declining income and profitability. The Cross Listed Index fell by -2.8% in April 2021 as FCI and NCBFG returned -6.47% and -2.24%, respectively. During the month, 11 stocks declined, 11 increased and 3 held firm. The government recently announced new restrictions which lead to the closure of several business sectors for a period of three weeks. In light of these restrictions business earnings will likely be compressed in the short term. We do not expect a significant change in company performances until a large segment of the population is vaccinated and restrictions are lifted. Growth is still projected for 2021 but it remains dependant on the ability of the government to procure more vaccines and conduct a successful rollout campaign.
In the past few months extensive fiscal support has led to an increase in individual consumption, business investment and government spending. These factors along with the vaccine rollout have fueled economic activity and growth. As at May 5th 106 million people or 32% of the U.S population were vaccinated. Stocks posted robust returns, with more than three quarter of the companies in the S&P 500 beating analysts’ earnings expectations. Real Estate, Consumer Discretionary and Financials were the top performing stock during April, returning 7.3%, 6% and 6% respectively. The Energy sector was the laggard with a monthly return of 0.3%. Further indicators of strong economic activity were higher home sales, high growth in the manufacturing index, significant job creation and growth in retail sales. Overall long term growth is expected as a result of a successful vaccination campaign, accommodative monetary policy and fiscal support. However, globally the uneven pace of vaccine campaigns threatens a synchronous global recovery.
Local Fixed Income
Short term TTD rates were stable over the last month. The 1 year rate remained at 0.54%, significantly lower than a rate of 2.08% a year ago. High demand for bonds is expected in 2021 with oversubscription likely for plain vanilla GORTT securities. Despite the low interest rate environment new corporate bonds weren’t issued during the month. We continue to expect short term rates to trend higher in the short term as system liquidity, which currently stands in excess of TT$8.1BN, has trended downwards year to date.
International Fixed Income
US Investment grade corporate spreads, as measured by the CSI BBB Index, fell by -0.87% over the month of April. The US 10 year treasury yield fell from a 1 year high of 1.74% on March 31st to 1.62% on April 30th. The pace of inflation remains in focus for investors as they evaluate the latest fiscal package and the expected spending from pent up demand. The consensus forecast is for inflation to average around 2% for the year.
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