Issue No. 33

For the month ended April 2023 the TT Composite Index returned 0.50%, driven upwards by the Cross Listed Index. The TT Cross Listed Index returned 2.06% over the month due to strong returns of 12.39% in NCB Financial Group Limited (NCBFG), its largest weighted component. The All T&T Index was relatively flat returning 0.06% as gains in Agostini’s Limited (AGL) and MASSY Holdings (MASSY) were countered by declines in Republic Financial Holdings Limited (RFHL) and Scotiabank T&T (SBTT). Over the month 10 stocks increased, 12 declined and 3 held firm. First Citizens Group Financial Holdings (FCGFH) and Ansa Merchant Bank Limited (AMBL) released financial results during the month. FCGFH reported a 9.8% increase in its EPS from $1.32 to $1.32 for the six-month period ended March 2023 whilst AMBL reported a decline in profits. 

In general earnings of large cap stocks have been positive and higher than expected. Moreover, we continue to expect a gradual appreciation in prices during 2023 as investor sentiment improves.

For the month April 2023 the S&P 500 Index returned 1.46%. Analysts paid attention to the start of the first quarter earnings season. Profits have generally exceeded expectations and 79% of the companies that reported earning beat estimates.  Communications and Consumer Discretionary led the gains, rising 10% and 9.8% respectively. Financials remained the laggard, falling by 10.4% due to the continued concerns surrounding the financial industry. Furthermore, inflation rose by 5% year over year in March, below investor expectations.

The first estimate for first quarter GDP came in at 1.1% driven by an increase in consumer spending. Meanwhile economic indicators were mixed over the month. U.S.  Retail sales were down 1.0% month over month in March compared to a fall in February of 0.2%. The decline in retail sales was driven by lower energy prices rather than less goods purchased. Consumer sentiment rose by 2.4% from 62 March to 63.5 in April as fears surrounding the financial sector alleviated towards the end of the month. The US unemployment rate fell back to historical lows in April, showcasing the strength of the labour market despite economic uncertainties.

Energy prices experienced a small gain with WTI Crude increasing from $75.67 in March 2023 to $76.78 at the end of April 2023. The re-opening of China’s economy, increasing jet fuel demand and oil embargos are expected to provide a boost to the energy sector in the short term. 

In seeking market outperformance, emphasis is on areas of the equity market which have historically shown low earnings volatility throughout economic cycles.

Yields increased on the short and medium ends of the curve when compared to the prior month. The 1-year rate increased from 1.04% in March to 1.27% in April whilst the 10-year rate stood at 5.18%. 

Month over month liquidity decreased slightly from $5.0 billion on March 31st, 2023, to $4.9 billion as April 30^th, 2023. In 2023 there has been an uptick in issuances with multiple Government issues and select small corporate entities coming to market when compared to 2022.  This trend is expected to continue as organizations take advantage of the current low rates.

US Investment Grade corporate spreads, as measured by the CSI BBB Index, were relatively flat at 1.81% when compared to the previous month’s value 1.80%. The US 10-year Treasury yield decreased over the period, from 3.47% on March 31^st to 3.42% on April 30^th.  The 2-year and 10-year yield remain inverted, the spread was at 0.58% at the end of April as the 2-year yield closed the month at 4.00%.  Investors are now pricing in one rate cut by the end of the year as economic data is digested and analysed.

Fund of the Month

Scotia Caribbean Equity Fund (TT$)

-Equity securities

-Focus on downside protection

-Medium-High Risk

-Potential for capital appreciation