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Issue No.7
Markets Wrap
Market Highlights
The FDA approved Johnson & Johnson’s vaccine for emergency use, making it the third approved COVID-19 vaccine and the first vaccine to have a single-dose regimen.
Investment Buzz
Economic stimulus refers to targeted fiscal and monetary policy action by the government to encourage private sector economic activity. Stimulus can include rate cuts, tax cuts or government spending.
| Index |
YTD ∆ |
1Yr % ∆ |
S&P 500 |
1.47% |
29.01% |
MSCI ACWI |
1.68% |
28.16% |
ALL T&T |
-0.56% |
-9.22% |
T&T Composite |
0.95% |
-11.90% |
Rates |
Current |
31-Dec |
GORTT 3M |
0.21% |
0.08% |
GORTT 10Yr |
4.71% |
4.68% |
US 3M |
0.04% |
0.08% |
US 10Yr |
1.41% |
0.92% |
Commodities |
Current |
YTD % ∆ |
Oil (WTI) |
$61.50 |
26.75% |
Nat Gas (HH) |
$2.77 |
9.14% |
Gold |
$1,734.04 |
-8.46% |
Local Equities
Government mandated restrictions continue to have a negative impact on operations in 2021. For the month ended February 2021, the TT Composite Index gained 0.51% whilst the All T&T Index fell by -0.45%. Recent earnings releases were mixed, companies with diversified operations such as Massy and Agositini’s showed improved results whilst profits in NEL, NCBFG and JMMBGL contracted. YTD, the TT Composite Index has been driven upwards by the TT Cross Listed Index. The Cross Listed Index increased by 4.12% in February 2021 with GKC and NCBFG up 3.90% and 8.86%, respectively. Locally, there has been some improved sentiment surrounding the energy sector in 2021 based on the increases natural gas prices in recent months. However within the last year there has been a decline in gas supply, impacting downstream energy participants and by extension the broader sector. During 2021 we expect some improvements in the non-energy sector stemming from an ease in restrictions post vaccinations.
International Equities
The US economy has been supported by unprecedented fiscal and stimulus measures. Most recently the House passed President Biden’s $1.9 trillion stimulus bill. US Equity markets experienced volatility throughout the month as several topics such as economic recovery, COVID-19 vaccine progress, earnings, rates and inflation all weighed on markets. Stocks fell towards the end of February as treasury yields rose amid an improving growth outlook and increased inflation expectations. During February the market was led upwards by the Energy, Financials and Communications sectors which returned 19.2%, 8.1% and 6.6% respectively. Only three sectors declined over the period as market confidence continues to improve. Economists have raised their GDP forecasts to approximately 5% for 2021 assuming widespread vaccinations. As at the end of February there were three approved COVID-19 vaccines and a rapid rate of increase in daily inoculations. We expect volatility in the short term as investors react to day to day vaccine news, new variants and the path to herd immunity.
Local Fixed Income
Short term TTD rates improved over the last month. The 1 year rate leaped to 0.48% in January from 0.22% in December. The rate has rebounded somewhat but is still below September’s rate of 2.08%. Limited investment options led to a 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 stabilize in the short term whilst still facing pressure from increased liquidity in the system which currently stands in excess of TT$8.6BN.
International Fixed Income
US Investment grade corporate spreads, as measured by the CSI BBB Index, rose by 1.69% over the month, pushing bond prices lower. Rates were higher across the curve with the 10- year ending February just below 1.5%.The sharp increase in yields can be attributed to rising inflation expectations and an improving growth outlook. Economists expect real yields and inflation expectations to rise together in 2021 given the strength in economic data so far, suggesting a ‘V’ shaped economic recovery.
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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.