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Issue No.6
Markets Wrap
Market Highlights
The U.S Securities and Exchange Commission (SEC) is closely monitoring and evaluating the extreme price volatility of certain stocks trading recently in order to protect investors, and to maintain fair, orderly and efficient markets.
Investment Buzz
Short selling is a strategy in which investors borrow a security, sell the security and then buy it back to return to the lender. Short sellers bet on, and aim to profit from, a fall in the security’s price.
| Index |
YTD ∆ |
1Yr % ∆ |
| S&P 500 |
-1.11% |
15.15% |
| MSCI ACWI |
-0.52% |
15.09% |
| ALL T&T |
-0.11% |
-6.66% |
| T&T Composite |
0.44% |
-11.12% |
| Index |
YTD ∆ |
1Yr % ∆ |
| S&P 500 |
-1.11% |
15.15% |
| MSCI ACWI |
-0.52% |
15.09% |
| ALL T&T |
-0.11% |
-6.66% |
| T&T Composite |
0.44% |
-11.12% |
| Commodities |
Current |
YTD % ∆ |
| Oil (WTI) |
$52.20 |
7.58% |
| Nat Gas (HH) |
$2.56 |
0.98% |
| Gold |
$1,847.65 |
2.47% |
Local Equities
For the month ended January 2021, the TT Composite Index gained 0.44% whilst the All T&T Index fell slightly by -0.11%. Earnings releases across the various sectors showed depressed revenues stemming from reduced operations in 2020. The TT Composite Index has been driven upwards by the TT Cross Listed Index, which has begun to rebound from 2020 lows. The Cross Listed Index increased by 1.61% in January 2021 with GKC, JMMBGL and NCBFG up 1.30%, 3.13% and 2.83%, respectively. Local companies National Flour Mills and Trinidad Cement Limited continue to outperform the market, posting positive returns of 16.28% and 50% for the month. In the first half of 2021 we expect a flat to negative market performance as the local business environment remains challenged and COVID restrictions persist. There has been some improved sentiment surrounding the energy sector in 2021, which bodes well for the local economy. However investors must remain cognizant of new strains of COVID-19 and potential issues surrounding vaccine rollouts.
International Equities
US Equities markets experienced volatility as investors reacted to speculative trades by retail investors, mainly those using popular website Reddit, in names such as GameStop and AMC Theatres. A few hedge funds experienced double digit losses, however most were able to navigate the Reddit-fueled trading frenzy with minimal losses. So far there has been a ‘V-shaped’ recovery in the US economy due to fiscal and monetary support. Companies that benefited from the work from home trend and that had strong recurring revenue outperformed in 2020. During January the market was led upwards by the Energy, Communications and Consumer Discretionary sectors which returned 6.4%, 4.8% and 3.2% respectively. Only three sectors declined over the period as market confidence increased. The IMF expects the US economy to grow 5.5% in 2021 based on expectations of vaccine related activity and policy support. So far this year Congress is already taking steps to pass another COVID relief bill. As long as the economy remains well below the Fed Committee’s target of full employment and stable 2% inflation the Fed signalled it will continue to provide accommodative measures to supplement growth, which we see as a tailwind for equities.
Local Fixed Income
Short term TTD rates remain low. The 1 year rate fell to 0.22% in December from 0.42% in November. The rate has fallen 2.07% in a one year period. Rising liquidity and limited investment options led to high demand for government securities throughout 2020 and in early 2021. Corporate issues remain scarce and no change is expected in 2021, despite the low interest rate environment. We expect short term rates to face further pressure from increased liquidity in the system which currently stands in excess of TT$10.7BN.
International Fixed Income
US Investment grade corporate spreads, as measured by the CSI BBB Index, rose by 2.50% over the month, pushing bond prices lower. Yields were slightly higher on the long end, with the US 10 year yield rising to 1.07%. Treasury yields are not expected to rise materially as they are tempered by the longer term growth outlook and low inflation expectations.
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Estelle Narine
777-0487
estelle.narine@scotiabank.com
Candice De Sormeaux
777-0732
candice.desormeaux@scotiabank.com
Adesha Gonzales
486-0581
adesha.gonzales@scotiabank.com
General Disclosures:
This report has been prepared by Scotia Investments Trinidad and Tobago Limited (“SITT”), a subsidiary of Scotiabank Trinidad and Tobago Limited. It is provided to you, our clients, for information purposes only and may not be redistributed. The information herein is believed to be reliable and includes information from public sources also believed to be reliable. While the objective is to provide information in a fair, clear and non-misleading manner, SITT does not represent or warrant that any information in the report is free from errors or omissions. Opinions and projections in this report are the views of the author(s) as at the date of this report.
The views expressed are subject to change and SITT has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof in the event that any opinion forecast or estimate herein changes or subsequently becomes inaccurate. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. Neither SITT nor any of its officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from the use of this report or any of its contents. The securities discussed in this publication may not be suitable for all investors.
This report is provided to you for informational purposes only. It is not an offer or a solicitation of an offer to buy or sell any securities or to participate in any trading strategy. This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation or particular needs of any specific person. Investors should seek advice regarding the appropriateness of investing in securities and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. The information in this publication is not intended to predict actual results, which may differ substantially from those mentioned in this report. Scotia Investments Trinidad and Tobago Limited, its directors, or other officers may have a position in, or engage in transactions in any of the securities mentioned herein.