Issue No. 35

For the month ended June 2023, the TT Composite Index returned -3.37%, driven by declines generated by both Indices. The TT Cross Listed Index returned -6.59% led by major declines in NCB Financial Group Limited (NCBFG) of -15.63% and GraceKennedy Limited (GKC) of     -11.69%. The All T&T Index also contracted by -2.51% as Unilever Caribbean Limited (UCL), Guardian Holdings Limited (GHL) and West Indian Tobacco Company Limited (WCO) generated negative returns during the month of June of -22%, -16.11% and -6.92% respectively. Over the month, 3 stocks increased, 18 declined and 4 held firm. 

During the month, Scotiabank T&T Limited (SBTT) released its half year results ended April 2023. Despite reporting a lower EPS of $1.95 as at April 2023 from $2.02 in April 2022, SBTT approved a higher Q1 dividend of $0.70 per share (Q1 2022: $0.65).

Despite contractions in the local equity market, we have seen resilience amongst the earnings data released thus far, which is anticipated to translate to some price recovery as investor sentiment improves. 

For the month June 2023, the S&P 500 Index generated a positive return of 6.47%. The US stock market delivered optimistic results as US consumer confidence increased, approaching close to its one and a half year high in June 2023. Growth was experienced across all sectors. Industrials and Consumer Discretionary delivered the biggest swings this month, climbing 11.7% and 10.8% respectively, while Consumer Staples delivered the lowest month on month growth of 1.8%. 

In June, the US Federal Reserve (FED) announced a pause in interest-rate hikes, leaving rates at 5% to 5.25%, after more than a year of consecutive rate increases. However, further increases are expected with the FED’s tunnel focus on achieving their 2% target inflation.

The final estimate for Q1 2023 GDP growth was revised up by 0.7% to 2% mainly as a result of upward adjustments to consumer spending and exports. However, US Consumer spending, the primary economic driver slowed sharply in May, suggesting Q2 US GDP may be less robust than previously anticipated.

Energy prices increased with WTI Crude climbing from $68.09 in of May 2023 to $70.64 at the end of June 2023. This increase followed the Organization of the Petroleum Exporting countries (OPEC) announcement on June 4 to extend crude oil production cuts through 2024. The projected fall in global oil inventories is likely to continue to put some upward pressure on crude oil prices within the short to medium term. 

In seeking to outperform the market, the investment strategy   continues to be focused on areas of the equity market which are expected to outperform as momentum builds, keeping in mind asset picks that have shown historically low earnings volatility. 

Yields increased on the short and medium end of the TT yield curve when compared to the prior month, while longer term rates remained relatively flat. 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 (CSO), headline inflation in May 2023 slowed to 5.7% from 6.0% in April 2023. The CSO anticipates a moderation in headline inflation going forward but noted that any adverse weather would affect local crop prices.

Private sector credit grew 6.5% year on year in April 2023, driven by an uptick in consumer loan demand and real estate mortgage lending. Local liquidity levels remained robust with the commercial banks’ excess reserves at the Central Bank moving from TT$4.6 billion in April 2023 to TT$6.3 billion in May 2023.

US Investment Grade corporate spreads, as measured by the CSI BBB Index, decreased from 1.88% to 1.72%. The US 10-year Treasury yield increased over the period, from 3.64% on May 31^st to 3.81% on June 30^th. The US treasury curve remains inverted with a 1.06% spread between the 2-year yield and 10-year yield points at the end of June. The curve is expected to remain inverted within the medium term as the FED’s primary focus is on fighting inflation.

Fund of the Month

Scotia Money Market Fund (US$)

-Short term Fixed Income Instruments

-Low Risk

-Liquidity and Capital Preservation