Issue No. 34

For the month ended May 2023 the TT Composite Index returned -4.56%, driven downwards by both Indices. The TT Cross Listed Index returned -10.21% over the month due to declines in all its components. The worst performers were NCB Financial Group Limited (NCBFG) and JMMB Group Limited (JMMBGL) which returned -19.8% and -8% respectively. The All T&T Index also declined, returning -2.92% as Guardian Holdings Limited (GHL), Republic Financial Holdings limited (RFHL) and First Citizens Group Financial Holdings (FCGFH) dragged the Index downwards. Over the month 5 stocks increased, 16 declined and 4 held firm.

We continue to expect a gradual appreciation in prices over the next year as investor sentiment improves and companies beat earnings expectations.

For the month May 2023 the S&P 500 Index returned 0.25%. Stocks were mixed as analysts reviewed economic data and news on the debt ceiling.  Technology and Communications led the gains, rising 17.3% and 13.1% respectively. Financials remained the laggard, falling by 7.2% due to the continued concerns surrounding the financial industry. Furthermore, inflation rose by 4.9% year over year in April, down from the previous month’s rate of 5%.

First quarter GDP was revised from 1.1% to 1.3% driven by an increase in personal consumption. U.S.  Retail sales rose by 0.4% month over month in April following a decline in the prior month. The rise in retail sales was driven higher by health, personal care and general merchandise. Consumer sentiment fell by 6.8% from 63.5 in March to 59.2 in May partially due to fears surrounding the financial sector and the debt ceiling. Meanwhile, consumer spending increased by 0.8% in April, beating the expected increase of 0.5%. Additionally, the US unemployment rate declined from 3.5% to 3.4% in April showcasing the continued strength of the labour market. Bloomberg analysts expected the rate to increase to 3.6%.

Energy prices declined with WTI Crude decreasing from $76.78 in April 2023 to $68.09 at the end of May 2023 as investors expected supply to be high given a lack of cuts by the Organization of the Petroleum Exporting countries (OPEC). The re-opening of China’s economy, supply cuts by large oil producers, 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 continues to be 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 1.27% in April to 1.37% in May whilst the 10-year rate stood at 5.17%. 

According to the Central Statistical Office real GDP grew by 3% during the first three quarters of 2022.Growth was driven by an increase of 4.7% in the non-energy sector which outweighed a decline of 0.7% in the energy sector. The unemployment rate declined to 4.9% in 2022 compared to 5.4% in 2021 as the economy slowly reopened following the removal of restrictions. Month over month liquidity increased from $4.9 billion on April 30th, 2023, to $7.3 billion as May 31^st, 2023.

US Investment Grade corporate spreads, as measured by the CSI BBB Index, increased from 1.81% to 1.88%. The US 10-year Treasury yield increased over the period, from 3.42% on April 30^th to 3.64% on May 31^st. The 2-year and 10-year yield remained inverted, the spread was at 0.76% at the end of May with the 2-year yield closing the month at 4.40%.  During the month investors were fearful that a lack of a deal on the US debt ceiling negotiations could place the US’s AAA credit rating in jeopardy. 

Fund of the Month

Scotia Global Equity Fund (US$)

-Equity securities

-Medium-High Risk

-Potential for capital appreciation