Issue No.19

For the month ended February 2022, the TT Composite Index returned -1.73%, led downwards by both the All T&T Index and the Cross listed Index. The All T&T Index increased by 0.92% due to price increases in Agostini’s Limited (AGL), Angostura Holdings (AHL) and Scotiabank T&T Limited (SBTT). The TT Cross Listed Index fell -3.28% during February 2022, as negative returns of -1.64% and -8.86% in Grace Kennedy Limited (GKC) and NCB Financial Group Limited (NCBFG) pulled down the Index. At the end of the month Guardian Holdings Limited (GHL) released their year end financial results. The group’s EPS increased 0.90% from $3.34 in 2020 to $3.37 in 2021. During the month 12 stocks increased, 10 declined and 3 held firm.For the month ended February 2022, the TT Composite Index returned -1.73%, led downwards by both the All T&T Index and the Cross listed Index. The All T&T Index increased by 0.92% due to price increases in Agostini’s Limited (AGL), Angostura Holdings (AHL) and Scotiabank T&T Limited (SBTT). The TT Cross Listed Index fell -3.28% during February 2022, as negative returns of -1.64% and -8.86% in Grace Kennedy Limited (GKC) and NCB Financial Group Limited (NCBFG) pulled down the Index. At the end of the month Guardian Holdings Limited (GHL) released their year end financial results. The group’s EPS increased 0.90% from $3.34 in 2020 to $3.37 in 2021. During the month 12 stocks increased, 10 declined and 3 held firm.

The government continued the easing of COVID restrictions, removing the time restriction on the country’s beaches and the mask requirement in personal vehicles. All students, many of whom have been at home since the start of the pademic in March 2020, are scheduled to the physical classtoom on a rotational basis from April 2022. Furthermore, children under 12 years old are now allowed in “Safezones” when accompanied by a vaccinated adult. These actions further emphasize the desire of the government for a slow resumption to pre-pandemic activities. We continue to encourage persons to vaccinate as further advances in this area should bode positively for increased economic activity and by extension the markets.

The equity markets were volatile in February 2022 with the Volatility Index gaining 21.43%. The military invasion of Ukraine combined with the expectation that most countries will lift interest rates in the coming year led to increased levels of uncertainty . The S&P 500 Index reported a negative return of -3.14% over the month.  All sectors reported negative returns apart from the Energy and Financials sectors which returned 26% and 1.1% respectively. The Technology, Consumer Discretionary and Real Estate sectors were the worst performers, returning -13%, -11.5% and -9.6% respectively.  The conflict between Russia and Ukraine led to a historic rise in rude oil prices, WTI Crude moved from $88.15 in January to $95.72 at the end of February. A prolonged rise in energy prices will impact inflation, consumer demand and economic growth. 

Furthermore, geopolitical tensions pose risks to commodities and the future Fed policy action. Both Ukraine and Russia account for a large portion of global commodity exports. Europe relies on the Russia for approximately a quarter of its oil and a third of its gas. Prolonged tensions could lead to a significant impact on shipments of everything including essential grains and fertilizer.

Our overall outlook for economic growth remains positive in the long term as the consumer remains strong, supply chain issues subside and COVID restrictions lessen. Investment in companies with quality, strong cash flows and earnings, diversification by sector and region can lead to outperformance. 

Fund of the Month

Scotia U.S. Dollar Bond Fund

1.  High quality intermediate-term U.S. government, mortgage and corporate bonds.
2. Low Risk.

Short term TTD rates again increased marginally over the month. The 1-year rate increased slightly from 0.37% to 0.40%. The rate has ranged between 0.37% and 0.54% since March 2021.

In the first two months of the year demand for plain vanilla GORTT and GORTT agencies’ securities remained strong. At the start of the year the corporate bond market remained relatively dormant with no new coming to market during the period. 

US Investment Grade corporate spreads, as measured by the CSI BBB Index, increased by 15.5% from 1.35% to 1.56% over the month of February. The US 10-year Treasury yield increased over the period, from 1.77% on January 31^st to 1.83% on February 28^th.  In the last week of the month the Ukraine war drove investors towards safe havens. As a result, the 10-year yield reached a one year high of 2.04% on February 15th. Inflation remains a key issue and taking policy action into account, economists expect it to hover above 4% this year.  In early March the Federal Reserve chairman confirmed a 0.25% rate hike instead of the previously expected 0.5% hike. However, the invasion of Ukraine has led to uncertainty over the policy and economic outlook.