Issue No. 49

In August, the Trinidad and Tobago stock market posted further declines, bringing its YTD return to -12.64%. The T&T Composite Index dropped -4.75% in August, as the All T&T index and TT Cross listed Index closed lower by -4.11% and -6.93% respectively.

The All T&T Index’s negative return was driven by double digit losses amongst 8 of the traded stocks, of which, Trinidad and Tobago NGL Limited (NGL) and The West Indian Tobacco Company Limited (WCO) recorded large losses of -24.3% and -19.23%. 

The TT Cross listed Index reversed last month’s gains following the -14.67% contraction in NCB Financial Group Limited (NCBFG) and              -11.61% in GraceKennedy Limited (GKC). Trading activity on the TT Composite Index was derived from 25 securities being traded of which 2 stocks advanced, 20 declined and 3 traded firm.

During the month, ANSA McAL Limited (AMCL) released its half year financial results ended June 30, 2024. AMCL recorded an EPS growth of 13.3% from $1.13 to $1.28, fuelled by a 5.5% expansion in revenues.  Subsequently, the company declared an interim divided payment of $0.30 payable in September 2024.

Investors are reminded that equity investing yields the best results over the long term through its capital growth potential. 

US equities continue to be a great driver of growth for investors, generating a monthly gain of 2.28% in August and delivering YTD returns of 18.42%. 9 of the 11 sectors advanced, with the largest upside seen from real estate, utilities and financials sectors, based on the heightened expectations of lower interest rates. The S&P 500 Index closed the month at another all time high of 5,648.40. 

The FED has signaled the strong possibility of an interest rate cut in its upcoming September meeting citing that inflation is within reach of the bank's two per cent target. Year over year, July’s CPI data rose 2.9%, below expectations and down from 3.0% annual increase reported in June. Markets reacted positively to the news of a potential cut as investors anticipate lower borrowing costs and a more favorable investment environment.

Concerns around reducing consumption and higher inventories within the energy space continued in August. Oil prices posted further declines of 3.21% this month moving from US $77.91 to US $73.55 per barrel. Natural gas prices rebounded from July’s lows and recorded a 4.47% jump to $2.127 while gold prices gained 3.21%, moving from 2,426.50 to 2,504.50 at the end of August. Analysts are predicting that oil prices will range in the mid to high 70s over the next year.

The July GORTT yield curve experienced another significant upward shift in interest rates. Consistent with previous months, this increase was observed across most tenors, with the shorter end of the curve seeing a more pronounced climb. The 1-year rate moved 0.35% from 3.40% to 3.74% while the 10-year rate moved to 5.52%, 0.09% higher than the prior month. Given the current interest rate environment, investors have shown a preference for shorter term instruments that are able to deliver higher returns.

The recent reduction in the reserve requirement of commercial banks is anticipated to increase market liquidity, allowing for greater investment opportunities and credit expansion to further stimulate the economy. 

The market continues to display a robust demand for fixed income securities, with corporate and government issues gaining healthy traction from investors. The climbing interest rates environment continues to provide great investment opportunities for investors to reinvest at higher rates.

August was a positive month for fixed income investors as bonds rallied on cooling inflation and favorable economic data which bolstered the probability for a September FED rate cut. Global Investment Grade debt, gauged by the Bloomberg Global Aggregate Index, posted growth of 2.4% during August while the US Investment Grade corporate spreads, as measured by the CSI BBB Index, narrowed from 1.28% vs 1.25% in August. The 10-year treasury yields softened moving from 4.03% on July 31^st to 3.91% on August 30^th while the 2-year yield ended the month down from 4.25% to 3.91%. The 0% spread between the 10-year Treasury yield and the 2-year Treasury yield further suggests investors anticipation for lower rates in the future.

Fund of the Month

Scotiabank US Dollar Bond Fund (USD$)

- Fixed Income Investments

-Low to Medium Risk

- Modest Capital Appreciation