Things continue to look up as Mayberry Jamaica Equities Limited [JSE: MJE] recently borrowed $2.2 billion in cash for new investments in stocks on the local stock market. This coincides with a B rating from Standard and Poor’s credit rating for Jamaica; an upgraded outlook to positive from stable.

CEO of Mayberry Investments Limited Gary Peart explained that “We got it at 7.25% for five years” with expectations that the gains in the market will outperform the cost of funds borrowed. The explanation behind the S&P upgrade was due to the combination of modest GDP growth and better external liquidity, agreeing with Peart’s statement that, “The economy is going in the right direction”.

MJE holds minority positions in some companies listed on the JSE mainly, Caribbean Producers Jamaica Limited [JSE: CPJ], JMMB Group Limited [JSE: JMMB], Caribbean Cement Company Limited [JSE: CCC] and Supreme Ventures [JSE: SVL]. Despite not directly saying which stocks they will be investing in, Peart mentioned that some of his top ‘buy’ picks are Stationery and Office Supplies [JSE: SOS], NCB Financial Group [JSE: NCBFG], IronRock Insurance [JSE: ROC] and of course the recent July listing MJE itself.

Mayberry Jamaica had initially considered selling a portion of its equity holdings but decided against it due to their bullish stance on the market foreseeing five to six years of consecutive growth. A prediction of what could possibly be the longest bull run in Jamaica’s history. MJE net asset value earlier this month was $10.61 per share, up 12 percent from $9.48 prior to listing on the Jamaica Stock Exchange [JSE].

With this increase in the span of three months, they are optimistic the upward trend will continue. For the bearish investors who may have concerns about the market pulling back, Peart recommended they invest in high dividend-yield stocks making it a win/win for everyone.

At Mayberry Investment’s Monthly Investor Forum, Mr Peart encouraged attendees to look towards the stock market rather than continuing with the typical savings account earning a meagre two per cent average interest rate on deposits.

He highlighted how much more profitable it would be if persons actually invested in commercial banks rather than just putting down their money for safekeeping. Agreeably, he admitted that in recent times it may be hard to find value on the stock market but with the services of a broker, investors can navigate these pitfalls.

Interested in buying MJE?

Contact SSL to get started.

 

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You may think we are referring to the rubbery material that stretches when you pull it but instead, we are referring to one of the year’s top performing first-day IPO in US history. It is the recently listed Dutch-based company, Elastic B.V. [NYSE: ESTC].

Elastic makes the power of search – the ability to find relevant information and insights from a large amount of data – available for a diverse set of applications and use cases. Much like other search engines such as Google, Yahoo, Bing!, etc. Elastic is determined to answer all your questions thoroughly. The truth is, you have been using Elastic without even realising.

On October 5th 2018, the first day of trading, the stock skyrocketed to a whopping 94% increase after listing at US $36.00 to close at $70.00. Before listing, the company had adjusted its IPO price a few times before deciding on 7 million shares at $36 per unit.

Furthermore, the company raised $252 million and ended the day with a market capitalisation of almost $4.9 billion. The proceeds will be geared towards the acquisition of or investment in technologies and solutions, research and development, working capital, sales and marketing activities.

Elastic is the latest tech company to go public contributing to what is referring to as the best year for tech IPOs since 2014. As a data service provider, Elastic equips other companies with relevant information after sifting through massive amounts of data.

According to its prospectus, the company will help in your everyday life, here’s how:

Have you ever wondered who detects those nearby drivers and riders when using Uber or Uber Eats? Elastic.

How is Tinder so efficient in finding those matches for you? Elastic powers those algorithms used to guide you to the perfect match.

Have you ever noticed how simple it is to shop online with Walgreens? Elastic helps you to find the right products to add to your cart.

With over 5,500 customers in 80 countries and industries, the company is helping individual developers and organisations. Reporting a growth of 81% year-over-year and revenue of $159.9 million in fiscal 2018 an increase from $88.2 million in 2017.

If the 6-year-old Elastic continues on a high, its biggest shareholder, co-founder and former CEO Steven Schuurman, who has almost 19 per cent could well be on their way to becoming a billionaire. Under the brand Elastic Stack, its portfolio of search products includes Elasticsearch, Kibana, Beats and Logstash with over 350 million downloads.

Considering this impressive start, Elastic tweeted “Today was a grand day. Thank you to everyone for joining us on this journey. We look forward to what happens next.”

Indeed, we will be looking on as well wondering if Elastic can stretch to the levels of some of its giant competitors like public cloud companies Alphabet Inc. (NASDAQ: GOOGL) and Amazon.com Inc (NASDAQ: AMZN).

 

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Geoffrey, the Giraffe, made the news once again as talks about a possible revival of the iconic Toys R Us [TOYs].

Are you emotional as I am?

It’s no secret that the 60-year-old American toy company has been going through a rough patch, closing their last 800 stores on June 29, 2018, liquidated its merchandise and completely sold everything in their stores. After making several efforts to restructure, issue bonds and introduce new products, the company made a tough decision to discontinue operations after there were halts in investments, billions of dollars in debt and the market shifting from brick and mortar.

The bankruptcy auction slated to take place this month was cancelled due to unattractive bids on the company’s assets. The lenders who are now in control of the retail giant are trying their very best to revive the brands of Toys R Us and Babies R Us so that they can maximize the value of both companies by opening new retail stores.

Seth Freeman, Senior Managing Director at Glass Ratner Advisory & Capital group, said “The company did generate operating profit—and without debt, its profitability would be easier to maintain” but the concern remains, how long will the revival take place and will they find retail space in time Christmas, one of their most profitable seasons.

We are less than 3 months away!

The good news is this generation is still aware of the brand, the bad news is the markets are shifting from brick and mortar. Toys are always in demand as children are born every day however post-millennials gravitate towards the digital world.

But not everyone is sentimentally happy about this [TOYs] rival. Thousands of former Toys R Us employees are still waiting for a total of $75 million in severance pay and some go as far as to call the re-emergence as a “PR stunt”.

The company is reported to be $7.9 billion in debt versus $6.6 billion in assets when it filed for bankruptcy in it’s last years. While the brand name and Geoffrey have value these are not liquid, so unless the company sheds it’s debt and major costs, a turnaround may not be feasible.

There’s a saying “Once bitten, twice shy”, but how eager will suppliers be to resume trading with [TOYs]? It is only fair to be a bit sceptical about providing goods to a company that failed. It may be a risk worth taking for hedge funds and angel investors but how sustainable will the company be?

Can Santa pull off a Christmas miracle?

Or is Amazon [NASDAQ: AMZN] forever on Santa’s nice list?

 

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Climate change is and has been one of the most urgent threats facing the earth today. More specifically, Global Warming is not a threat for the future but a present reality.

Can you imagine what the world will look like or be if we do not act now?

Every country today, including Jamaica, has become even more conscious of their surroundings. This has brought a world-wide cohesion with countries making every effort to slow down, stop or even reverse the depletion of the environment; one specific ban is that of plastic bags.

In the United States, most of the supermarkets and other retailers have already transitioned from the distribution of plastic bags to consumers, issuing paper bags or reusable bags which are purchased. Likewise, in the United Kingdom, consumers are either forced to bring their own bags, carry their goods in their hand or pay 0.10 GBp (10 pence) or sometimes even 0.20 GBp for a plastic bag.

We see here that the trend in these countries does not fully ban the use, but only deters consumers from their usage because of the cost associated. However, effective January 1, 2019, the Jamaican government will ban the use of plastic altogether and will charge any company if they are caught using it.

What does this mean?

Plastics have always been the cheaper and more convenient packaging option. Persons would not only be able to take their groceries in loads but later be used as garbage bags. This ban will both hurt retailers as well as consumers. Companies will now have to source an alternative way to package their products (usually more expensive than plastic) and therefore, as the company’s expense increases, so too do the cost of the items to consumers.

On the other hand, changing for the better sometimes costs you more. Companies or individuals can take this change as a market opportunity to provide alternative packaging, valued at around JMD 3 Billion. In the 60’s and 70’s, most of the bags that were being used were of paper material.

Jamaica Packaging Industries Limited (JPI) is wondering whether the country will revert to using same; the company already conducts the importation of paper bags from Latin America in small quantities and is looking to increase the supply due to the projected level of demand. Similarly, our well-known junior market packaging company AMG Packaging & Paper Company [JSE: AMG] is also doing their research and feasibility study.

Plastic bags not only pollute our water and land, but they are harmful to wildlife, marine life, human health and is very costly to remove from the environment. This ban can be the source of saving money, energy and building businesses, which will, in turn, boost our economy.

 

 

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Investors are craving and anticipating influential marijuana companies that are listed on the stock exchange or are planning to sell their shares via an Initial Public Offering.

This surge may be due to the big day October 17, 2018. October 17th is not only Ziggy Marley’s, son of reggae icon Bob Marley, birthday but also marks the day Canada will legalise recreational marijuana for purchase and consumption to Canadians age 18 and over.

Naturally, there will be limitations to this bill, such as the amount you can possess or grow at home. However, this action represents a shift how weed is perceived as well as an exciting stock market journey, which will lead to further growth and development for the country.

The news of the Great White North’s intentions to legalise cannabis for recreational purposes broadcasted in late June. This resulted in a significant advancement in stock prices for major companies in Canada such as Canopy Growth Corporation [TSE: WEED], Aphria Inc [TSE: APH] and Cronos  Group Inc [TSE: CRON]. WEED has increased its stock price by 35%, APH 36% and CRON 52 % since the word began spreading of the legalisation to come.

Canopy Growth Corporation had extended an arm on the New York Stock Exchange [NYSE: CGC] in May 2018. This too popped 15% and is now trading at US$49.09. This increase may also be due to the brewers of Corona, one of the top selling beers in the world, announcing going big with its stake in Canopy Growth Corp. by an additional 4 billion USD!

Undoubtedly a stock to watch.

Aphria Inc has announced that it will be acquiring all ordinary shares of LATAM Holdings Inc, a company owning cannabis licenses and assets in Jamaica, Colombia and Argentina. This will increase the value of Aphria with now a more diversified approach in cultivating the herb internationally.

Marijuana in Jamaica typically known as ‘ganja’ is a popular element of the Rastafarian culture and is legal to be used for religious practices. Ganja has been legalised for medicinal uses in the country and has since many companies emerging and taking up the opportunity to cultivate this intriguing plant. Popular companies such as Kaya Herb House, a tourist attraction for the viewing and partaking of all things ganja as well as Medicanja, medicinal marijuana firm which is planning on going public on the Jamaica Stock Exchange [JSE] very soon.

While investing in cannabis stocks may be attractive to the more aggressive or the lovers of the herb.

A few may question, how long will this “high” last on the overly hyped marijuana industry?

 

 

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Apple Inc [NASDAQ: AAPL], is one of the leading technology companies listed on the U.S market. The $1 trillion company is renowned for its robust data protection software, and innovative techniques which keep consumers who are edging for the latest gadgets happy, but what does this trillion milestone mean for loyal consumers?

Investors who purchased AAPL shares five years ago would have experienced an average of 229% return on investment! A value, which outweighs the cost of anxiously awaiting the next release of a new product and then cashing out hundreds to finance the purchase.

“Life is easier with an iPhone” is just one of the selling points of Apple. Users commend the robust privacy protection software, responsive updates to annoying glitches, user-friendly experience and sleek, cutting-edge designs, that the company continues to focus on.

Apple Inc is in the race to continue supplying millennials and with competitors like Microsoft, Google or Samsung, who are just as focused on creating futuristic technology, the markets can quickly shift from one player to the next.

Why not invest in a $1 Trillion company that will reap returns, pay dividends, brand loyalty? In comparison to the starting price of US$ 999 for the newly released iPhone X, the stock last traded at $232.02 on October 3, 2018; a mere fraction of what it costs to be a shareholder in the company.

Though not the 1st company to hit a $1 Trillion market capitalisation, the conversation is now, how prepared is the company to continuously invest in research and development?

Note that past results are not a determinant of future performance. However, a slow-down in the growth of the smartphone market-Apple’s highest income generator is not anticipated any time soon. Apple has displayed its resilience to change and is no doubt a stock to keep for the future.

As we await 2019’s release of more high-end gadgets and software that improves and continue to prove Iphone’s commitment to making life more comfortable; whether as an investor or as a loyal customer, there is a benefit to look forward to.

 

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Whether you call it a business cycle or an economic cycle you’ve undoubtedly heard the term “recession” before. It’s usually followed by the looks of sheer panic and horror stories of people losing everything. The financial crisis of 2008 is still fresh in the memories of many investors, and with a 10-year bull market coming to an end, investors are looking to mitigate the effects of a bear market and dare I say a recession.

Market indicators are signalling that a change in the global market is coming soon as the stock market skyrockets, interest rates, employment and inflation all on the rise.

Is it possible to gain during a market downturn?

Yes.

 

Let’s discuss a few tactics that have been tested and proven to work during a recession:

Update Your Asset Allocation

Investors should complete an investment policy statement (IPS) when opening an investment account, if not, you should fire your advisor immediately.

An IPS speaks to your preferred asset allocation, the problem is, it is often forgotten and not updated based on market conditions, changes in risk tolerance and goals. This can be detrimental during a recession as your 50-50 split of bonds to equities can cost you.

Right now, asset managers and advisors are recommending clients shift from active to passive investing (Funds/ETFs) as well as going overweight in equities versus bonds. This type of strategy focuses on capital preservation as the Feds increases rates and quantitative easing continues. Failing to adapt, investors may soon face the harsh realities of an unforgiving market.

 

Investing in “Recession Proof” Stocks

When a recession shakes the economy, people are often caught off guard, leading to knee-jerk emotional reactions.

“Sell Everything!”

The trick is to buy into companies with diversified revenue streams and a reputation of stable performance during these less than stellar market conditions. Bank of Nova Scotia [NYSE: BNS] has never missed a payment in 45 consecutive quarters; discount retailer Walmart Inc [NYSE: WMT] saw steady growth in 2007 and continues to outperform the industry 10 years later. Industries such as utilities & healthcare may not see as much capital appreciation but are classified as portfolio stabilisers simply because you can’t live without them.

 

Go Real Estate

Falling home prices during a recession is nothing new. Now buying a property during a recession is not a good practice if you are looking short term as interest and unemployment rates are high, and market sentiments are low.

You may get your dream home at an unimaginably low cost, but the question is how low can prices go?  Markets can take on average 2-10 years to recover from a recession but once it does the value of these undervalued/foreclosed homes should increase, thus making you profitable.

 

Timing Is Everything

Recessions happen after the peak phase of the business cycle. You can identify a peak based on favourable market sentiments, stock prices upswing, growth in GDP and earnings creating financial bubbles.

This is followed by an economic downturn. GDP growth falls, massive layoffs and we enter a bear market. In 2008, the markets contracted 2.4% in Q1, rebounded in Q2 and plummeted in Q4 by 8.5%, but wait there’s more. In 2009, the markets dropped by another 5%, and unemployment reached double digits.

 

Recessions are a natural part of any market and should be greeted without fear. Despite the news during the 2007-2009 period, there were many winners in the stock market game, these investors positioned their portfolio to benefit from the trough and come out on top.

 

Will that be you?

 

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Since Facebook (FB: NASDAQ) acquired Instagram in 2012 for $715 million, founders Kevin Systrom and Mike Krieger had stuck around keeping the brand and product independent of Facebook while relying on its resources and engineering talents to help it grow.

Systrom and Krieger say peace out to Mark Zuckerberg.

According to Bloomberg, the departure was prompted by the founders’ frustration over the direction of the photo-sharing app as Zuckerberg has become more involved with the day-to-day activities of the company.

You might be wondering, doesn’t this sound familiar?

It is.

WhatsApp’s founders Brian Acton and Jan Koum, departed in a similar manner after disagreements with Zuckerberg over the business model of the app and data privacy which FB seems to have a major problem with. Since their departure, Facebook had enforced some changes to the terms of service of WhatsApp, giving FB access to users’ phone numbers. Furthermore, it had advocated for unified profiles that allow for ad targeting and data mining. These changes may have led some Instagram employees to wonder that something similar will happen to their group and it seems their concern is now a reality!

With over 1 billion users monthly, Facebook has relied on Instagram as its main source of advertising revenue in addition to its own news feed.

Many may ask though, what does this mean for the future of Instagram?

For one, it could possibly be integrated into Facebook losing its independence and becoming another product division and two, it may lose its credibility as FB is continuously causing worry over its privacy scandals, fake news and election interference.

While Facebook has been around longer than Instagram with over 42.2 billion users, it is becoming more dependent on the younger and favourable ‘Gram’ which offers an attractive escape to a younger cohort of users who are wary of the political debates and privacy scandal.

Today, millennials are more vigilant about protecting their online footprints and as such is losing interest in FB while gravitating towards the great benefits of disappearing stories, encrypted data and more.

In the end, the departure of Systrom and Krieger gives Mark Zuckerberg the opportunity to take charge of Instagram directly. With this freedom, he must know how many changes to make without compromising the integrity and value of Instagram’s less tarnished brand.

 

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With the howling winds, banging windows and rain battering your roof during hurricanes, how your portfolio is performing is the least of your concerns.

However, there is money to be made when mother nature strikes!

Preparing yourself physically for a hurricane is of primary importance but keep in mind also that being able to benefit from companies with a boost in sales due to potential hurricane damages is a great opportunity.

In anticipation of hurricanes, companies in the insurance & tourism industry are adversely affected, this is reflected in their stock prices. In 2017, Margaritaville (Turks) Limited [JSE: MTL] sustained damages to their operations and were forced to close for two months which caused lower than the expected revenue for that year and their prices dipped.

This, of course, presented a buying opportunity for investors.

A smart tactic savvy investors use, as this allows for a great entry point for maximizing returns.

Insurance companies more specifically property and casualty, suffer losses due to paying out for hurricane damages they are able to recoup by increasing premiums in the aftermath. In September 2017 Hurricane Irma hit the US with record high damages, this had HCI Group Inc. [NYSE: HCI] and Heritage Insurance Holdings Inc. [NYSE: HRTG] dropping 14.7% and 14.2% respectively. Hotels, villas, restaurants and other leisure-based companies may suffer a drop in revenues due to renovations, lack of hotel rooms, as well as the destruction of fish and their habitats for food production.

On the other hand, companies such as Home Depot [NYSE: HD], Costco Wholesale [NASDAQ: COST] and Generac Holdings Inc. [NYSE: GNRC] are expected to boom as sales increases. The demand for consumer necessities, generators and hardware supplies are high before and after a hurricane for security, preventive and corrective construction and simply being sufficiently supplied with food provisions.

The state of Texas had large amounts of reconstruction done after Hurricane Harvey in August 2017. This resulted in stocks prices advancing for Home Depot [NYSE:HD], the main supplier of home improvement materials. In 2017, HD had a 23% increase due to both Hurricane Harvey and Irma. This stock is currently trading at $211.71 having popped 2% since Hurricane Florence earlier this month.

It may sound daunting but positioning your portfolio during natural disasters is smart move.

 

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It is no secret that stock prices have climbed to significantly high levels and naturally when investors see these high share prices, they often wonder whether the companies will stock split, thus putting more shares on the market but at a lower price.

A company’s overall value remains the same with a stock split, but a shareholder will double the number of shares in their portfolio, and those shares will trade at half the previous price.

Let’s look at some familiar stocks who have seen share prices rise to very high values. We’ll then examine the reasons why a company would choose to split its shares of stock or choose not to.

Amazon [NASDAQ: AMZN]

As of September 18, 2018, Amazon is trading at US$1,946.77. That’s nearly 40 times the price for a share of Coca-Cola. The price for of shares the major online retailer has nearly doubled in the last year. Believe it or not, Amazon did stock splits regularly, doing so three times in a 15-month span in 1998 and 1999. Back then, shares were trading much lower and dipped to single digits. When asked in 2017 whether he’d consider a stock split now, Amazon CEO Jeff Bezos did not rule it out.

Booking Holdings [NASDAQ: BKNG]

Also known as Priceline, this travel service company was trading at nearly US$1,901.60 per share as of September 18, 2018. This high price is at least in part due to a “reverse” stock split in 2003, in which shareholders received one share for every six they owned. The reverse stock split came after a major market downturn that slammed the company’s share prices to nearly US$1.

Thus, there may be some institutional wariness about splitting and allowing prices to get too low and there’s no indication from management that a stock split will be happening anytime soon.

Berkshire Hathaway [NYSE: BRK]

Warren Buffett’s company is perhaps the best example of a company that rarely shows a desire to split its shares of stock. Today Class A shares are trading at more than US $326,000  a piece.

No that’s not an error.

However, Class B shares, which are more available to everyday investors, are trading at US$217.30. The major difference between Class A and Class B is that B shares don’t have the same voting rights as A share. The company split Class B shares 50-1 in 2010, but has never split Class A shares.

Why Split?

• Make shares more affordable for more people.
• Avoid a concentration of shares.
• Allow for greater liquidity.
• Some companies will split shares simply as a way of getting people to believe share values are rising.

Why Not Split?

• Many companies prefer to avoid splitting because they believe a high stock price gives the company a level of prestige.
• Smaller companies may also wish to avoid stock splits because of a danger of share values falling too low.

What are your thoughts on stock splits?

 

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Our government is no doubt focused on advancing Jamaica’s economic growth, but one thing that goes hand in hand with growth is a low crime rate. The idea may sound eerily similar the chicken and the egg dilemma; but what came first crime or growth? Regardless of your opinion, you cannot deny a correlation does exist.

Crime affects the individual, community, and society on a whole at every level.

It’s tempting to suggest that significant macroeconomic factors explain crime trends. It is indeed simple to find stories that may predict the new crime trends to explain the reason Jamaica’s economy tanked in 2008; however, there is more to this.

Criminologists claim that tough economic times make more people willing to commit crimes and that bad economies lead to more property crimes and robberies as criminals steal coveted items they cannot afford. The economic anxiety of bad times can lead to drastic rises domestic violence and higher consumption of mind-altering substances, leading to more destruction in general.

Economists tend to argue the opposite, that better economic times increases crime. More people are out and about flashing their shiny new smartphones and tablets, more new cars sit unattended in parking lots, and there are more big-screen televisions in homes to steal. Better economic times also mean more demand for drugs and alcohol.

Do you agree with the criminologist or the economists?

A high rate of crime has many adverse repercussions, such as:

1. A higher cost of doing business – business will now have to employ different forms of security and allocate resources to repair damages incurred.

2. Brain Drain – crime impacts the human capital as skilled workers migrate to find a better quality of life. Let us not forget, during times of extreme violence in communities; schools are closed causing instability and shift the priority from education to safety.

3. Budget – Every year our televisions are blocked out for days as the government and opposition debate the budget. How much to spend education, healthcare, security … a politicians phone bill? With a high crime problem, more funds will be diverted from other areas such as education to help combat the crime dilemma.

The bottom line: Crime is episodic, and there is no singular effect of the economy on crime. To understand and prevent crime, it is, therefore, necessary to understand what type of period we are in. It’s also essential to understand what forces are at work locally, rather than focus on the national picture.

 

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The antitrust lawsuit filed against AT&T Inc. has been one of the most closely watched court cases in decades. Following AT&T’s [NYSE: T] bid to purchase Time Warner [NYSE: TWX] in 2016, the U.S. Justice department quickly filed an antitrust lawsuit over the acquisition, on the basis that the merger would “greatly harm American consumers”.

However, on June 12, 2018, District Judge Richard J. Leon ruled in favour of AT&T, thus allowing the acquisition to go ahead with- surprisingly -no conditions or remedies. This win for the company has made investors even more eager for investment opportunities for new acquisitions. The market sentiment for the telecommunications and media industries has driven up stock value of companies like Discovery Inc. by 4.7 percent amid speculations about it being the next target. The decision positively impacted other media houses like Comcast, Disney and Fox, whom all saw a stock boost as a result. Additionally, Aetna’s shares jumped 4 percent after hours, and 21st Century Fox’s shares rose by more than 7 percent.

According to Ed Black, President of the Computer and Communications Industry Association, the merger has set a precedent for more to come in the future. People are now incentivised to act upon acquisitions that they might have been considering previously. Comcast has submitted a bid for 21st Century Fox set of USD$65 billion, which is higher than the USD$52 billion bid proposed by Walt Disney [NYSE: DIS].

While we expect a resubmission of the lawsuit, a loss for AT&T and Time Warner will no doubt usher a new era of government scrutiny over so-called vertical mergers and halt attempts by companies like Disney, Fox and Comcast to announce their megadeals. This decision could also exert more pressure on companies like Amazon, Netflix and Google’s YouTube, which have been competing with traditional media companies.

What exactly does this ruling mean for AT&T?

The telecom powerhouse will finally have a sizable portion of the entertainment industry. They will now handle the programming of popular media franchises such as Game of Thrones, the Harry Potter movie franchise, and CNN – as well as the infrastructure that delivers that content to the public.

Shares of AT&T fell while Time Warner stock rose as is typical during a takeover. AT&T’s stock fell as much as 3 percent, bringing its dividend yield to 6 percent and Time Warner shares were up as much as 5.3 percent to more than USD$100.00 per share in after-hours trading Tuesday.

Our analysts believe that the share price of AT&T represents the level of uncertainty that the market holds since the company will be undertaking the massive debt that comes with the acquisition of Time Warner with its long-term debt rising from $134 billion to more than $175 billion.

It is crucial to keep an eye on how the stock prices for both parties’ progress in the coming two weeks, as the deal is set to close by June 20, 2018, or AT&T will incur a charge of USD$500 million. With the recent drop in the value of AT&T shares, investors might see this as a viable buying opportunity as they anticipate an upward trend once the merger has settled. Just as the price of Time Warner is rising, AT&T will soon realise an appreciation of their share price once they start to enjoy the profits from their latest investment.

 

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Economic growth is a key a driver of gold demand, especially in emerging market (EM) countries where there is a high affinity for gold (for example: cash for gold) and investment.

At the same time, gold tends to perform well in periods of crisis. Having a strategic investment in gold tends to help in improving the portfolio of emerging market countries and their respective economic performances as it can be used to:

• Protect against systemic risks, which reduce portfolio volatility and losses;
• Hedge foreign-exchange risk at a lower cost than traditional currency hedges.

Dual in nature

History has shown us, that gold has performed well with returns on par with stocks over multiple time periods. It is not merely a hedge that eats into profits, but it also provides diversification during bull and bear market environments.

Emerging markets potential

EM investments have a tremendous amount of potential for growth supported by economic trends. EM continues to play an ever-important role in asset allocation as a source of return, but it usually carries higher volatility.

Lofty valuations, market downturns and correlation

Lofty valuations in developed markets, as well as low bond yields across most developed economies have led to a more significant proportion of investment growth in new markets like emerging ones. Cheaper funding in the US has allowed better access to EM. However, expectations of rising interest rates in the US could cause uncertainty and hurt the attractiveness of EM exposure.

There is a higher beta of 1.26 in emerging markets versus the MSCI World Index. Systemic risks that impact global economies have an even more substantial effect on emerging markets. As gold often acts as a haven and hedge against systemic risks, it can provide an appropriate hedge to EM exposure.

And while EM stock performance is often linked and correlated to commodity performance, this does not hold true with gold, especially in market downturns. Gold has a negative correlation with risky assets during extreme market sell-offs yet provides returns during market strength. EM jewellery demand typically falls during market downturns, but this is generally offset by the increase in investment demand worldwide.

An asset in portfolios

Adding gold to a portfolio generally produces higher absolute and risk-adjusted returns than a fully hedged or unhedged portfolio. Gold is different than traditional hedges because gold gives an investor’s portfolio positive correlation in a rising market and negative correlation in a falling market, gold has a dual nature for investment purposes – this quality is not seen in other traditional hedges.

Choosing whether to hedge the foreign currency or systemic risk of an EM portfolio is a crucial decision for any investor. Regardless of the choice, having some gold exposure can provide an advantage for risk-adjusted returns compared to a portfolio with no gold exposure.

 

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Investors have been on the edge recently as the Italian economy hangs in the balance. This is stemming from a possible debt crisis that currently looms if Italy decides to exit the European Union (EU). Investors have since responded to the news by dumping Italian bonds which  has sent the two year Italian bond yield soaring to almost 2.7 percent; yields which were in the negative just two weeks ago. The ten year Italian bond increased its yield to 3.44 percent. This is the highest it has risen in over four years as bond prices fall.

Italian bonds aren’t the only instruments being dumped as investors are also dumping government bonds in other debt-heavy Eurozone countries such as Portugal and Spain. Even European banks are feeling the pinch as investors are also selling European bank stocks fearing that the banks will more than likely suffer losses on large bonds as prices continue to plummet. Italy’s largest bank UniCredit’s shares fell by 5.6 percent while Spain’s largest bank Santander fell by 5.4 percent.

How did Italy get to this point?

Italy had an inconclusive election in March of this year. Following that, there is currently a power struggle between the Eurosceptic populists and the Pro- European Union politicians. The Eurosceptic populists are those who are against the increasing powers of the EU and opposes the connection of a European country to the Union. It is said that the EU opposers won the election and choose a Finance Minister from within to oversee the government, however, the Italian President, Sergio Mattarella, vetoed the appointment in order to dispel the risk of Italy abandoning the Euro.

Given that the current government is displaying much uncertainty and division, Italy may be having re-elections soon.

Currently, Italy’s debt is 2.3 trillion Euro which is 135 percent of the country’s GDP.

 

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Digicel announces their plans to exchange  the full amount outstanding on both the 8.25% (2020)  and 7.125% (2022) bonds issued.

$2bn of 8.25% 2020 notes are offered to be exchanged for $2bn of new 8.25% 2022 notes;
Issuer: Digicel Group One Limited – 95c if tendered after the early tender date of September 14.

$1bn of 7.125% 2022 notes are offered to be exchanged for $1bn of new 8.25% Cash/PIK 2024 notes (7.125% cash/1.125% PIK);
Issuer:  Digicel Two Limited- 95c if tendered after September 14.

The exchange pushes maturities forward but does not fully address the issue of maturity concentration between bonds of 2020 and 2022. This move is likely to clear the refinancing risk of the ’20s that was of great concern for the relevant markets.

The offer is subject to a 90% acceptance rate for each series of notes with the tender expiration date slated for September 14. The company expects that through improved results this may channel the refinancing of debt maturities in the capital markets.

Sygnus Credit Investment Limited (SCI) whose initial public offering closed on May 16th 2018, has increased its Initial public offer from USD$10 Million to over USD$ 20 million, coming in at about 190 million shares.

Moreover, according to SCI’s whose Prospectus explicitly reserved the right to do so in any event, stated “the company reserves the full, unqualified and absolute right to increase the number of Shares in the IPO to satisfy all or part of the applications in excess of the 90,909,091 Shares, which are comprised in the IPO.”

Furthermore, Chief Executive Officer and Head of Investment Banking at Sygnus Capital Berisford Grey further affirmed this stating “Our decision to upsize to US$20 million is based strictly on our assessment of our pipeline and the growing demand for private credit investment by medium-sized firms across various sectors.”

SCI whose reason for listing is to be a household name and leader in the non-traditional financing niche, providing more avenues for medium-size businesses for growth. In addition, with this IPO SCI seeks to raise additional capital in Jamaica to boost its US$31.4 million deals, in which US$3.2 million has been approved, US$12.3 million has been mandated and US$15.9 million are at various stages of prospecting.

Sygnus Credit Investments Limited (SCI) is an international business company established under the International Business Companies Act, 1999 (as amended) of Saint Lucia.
SCI is a speciality private credit investment company, dedicated to providing non-traditional financing to medium-sized firms across the wider Caribbean region.

The credit SCI delivers is usually more customised and flexible than traditional sources.  As a result, the company offers an alternative channel through which medium-sized firms, which are typically overlooked by conventional forms of financing, can access capital to drive their expansion and growth.

 

 

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