HIGHLIGHTS

Local Markets

• 2024 Performance:
  • TTCI ↓ 11.6%
  • All T&T ↓ 12.7%
  • CLX ↓ 7.7%
• Performance Drivers:
  • Resilient Earnings
  • Cooling Inflation
  • Weak Investor Sentiment

• Outlook:

• Increased Economic Activity

International Markets

• 2024 Performance:
  • US Markets – S&P 500 ↑ 23.3 %
  • European Markets- Euro Stoxx 50 ↓0.9%
  • Asian Markets – MXASJ ↑ 7.7%
  • Latin American Markets – MSCI EM ↓ 30.4%
• Performance Drivers:
  • Cooling Inflationary Pressures
  • Interest Rate Cuts

• Geopolitical Tensions

• Outlook:
  • Increased Economic Activity

We take this opportunity to wish you a very Happy New Year from the team at Bourse! This week, we review the performance of local and international stock markets for 2024, which offered mixed fortunes for investors. T&T and major regional markets were broadly lower in a year influenced by weaker domestic investor sentiment. International equities posted mixed results, with U.S markets leading with consecutive double-digit gains, followed by Asia, while Europe and Latin America lagged with negative returns. Resilient growth, cooling inflation trends and US interest rate cuts were all supportive of international markets, despite ongoing geopolitical tensions. Will markets maintain trend into 2025, or could new developments and/or changes in investor sentiment change their course? We discuss below.

Local Indices Lower

Local/regional equities have endured three consecutive years of declines. The All Trinidad and Tobago Index (All T&T) declined 12.7%. The Trinidad and Tobago Composite Index (TTCI) fell 11.6%, closing at 1,073.23, while the Cross Listed Index (CLX) experienced a smaller decline of 7.7%. MASSY Holdings Ltd. (MASSY) led the volume traded on the Trinidad & Tobago Stock Exchange (TTSE) with 36.9M shares traded ($143.3M by value). JMMB Group Limited (JMMBGL) followed, with 10.8M shares traded ($13.5M by value).

Major Movers

Price gains were somewhat scarce in 2024, with a handful of stocks posting positive price movement. Prestige Holdings Limited (PHL) increased 21.5%, supported by improved earnings. CIBC Caribbean Bank Limited (CIBC) increased 15.1%. Ansa McAL Limited (AMCL) advanced 10.6%, boosted by recent acquisitions. L.J. Williams Limited A (LJWA) saw a rise of 4.8%, while Unilever Limited (UCL) recorded a slight gain of 1.8% in 2024.

For 2024, major decliners included L.J. Williams Limited B (LJWB, â 66.5%), Trinidad and Tobago NGL (NGL, â 56.6%), Guardian Media Limited (GML, â 45.5%), West Indian Tobacco Company Limited (WCO, â 37.1%), National Enterprises Limited (NEL, â 32.8%).

Some notable transactions by publicly listed companies in 2024 included:

• ANSA McAL Limited (AMCL): The Group, via its US subsidiary, ANSA Chemicals Limited, acquired the US-based chlor-alkali producer, BleachTech LLC. The transaction was completed on 1^st November 2024. On 4^th April 2024 – AMCL entered into the Asian alcoholic beverages market via a joint venture agreement with Globus with Global Spirits Limited (GSL), to establish Globus Ansa Private Ltd (GAPL) in which each party would hold 50% of issued and allotted ordinary share capital.
• Agostini Limited (AGL): The Group acquired three pharmaceutical and personal care distribution companies in the Dutch Caribbean: Aventa NV (Curaçao), Aventa Aruba NV and Pharmaceutical Warehousing Incorporated (Curaçao) was completed on June 28^th, 2024, acquiring 100% of the outstanding shares.

Comm. Services, Financials boost US stocks

The bellwether index for US equity markets, the S&P 500 ended 2024 on a strong note, advancing 23.3%. This marks the second consecutive year of double-digit annual returns exceeding 20%, highlighting optimism by investors in US markets.

The Communication Services sector (XLC) was the top-performing sector in FY2024, up 33.2%, as investors continued to favour mega-cap tech-related stocks and companies poised to benefit from advancements in artificial intelligence (AI). The Financial Sector (XLF) and Consumer Discretionary Sector (XLY) also rallied 28.5% and 25.5% respectively for FY2024. The Materials Sector (XLB) is the sole sector in negative territory, falling 1.6% for the period under review, adversely affected by an economic slowdown in China and relatively elevated interest rates globally.

European Stocks Underperform

All major European indices produced positive returns in FY2024, except for the benchmark, measured by MSCI Europe Index, and French equities. European stocks experienced mixed performance, driven by the impact of changing interest rate environment.  The European index declined 0.9% relative to 16.7% gain in 2023.

German equities rose 8.2%, relative to 20.1%, outpacing its regional peers, owing to increase consumer demand in the technology sector.   Spanish shares increased by 7.7%, amidst improved economic outlook despite persistent inflationary challenges.   Italy and English markets yielded returns of 5.7% and 3.9%, respectively. France equities lagged its peers, down 8.2%, driven by concerns about the country’s fiscal deficit and political fluidity.

Asia Broadly Higher

Asian equities achieved broadly positive results in 2024, amidst resilient economic outlook for the region. The Asia ex-Japan benchmark index advanced 7.7% in 2024 compared to 4.6% in the prior period.  Taiwan equities led gains within the region, advancing 20.2% in 2024 relative to 26.7% in 2023, boosted by its semiconductor companies amidst robust demand for artificial intelligence-related hardware and applications. Hong Kong reported a gain of 18.3% compared to a decline of 13.8% in the previous period, impacted by increased expansion in China’s manufacturing sector. Chinese equities benefitted from significant policy-supported measures, resulting in a gain of 16.3% for the current period.  India equities grew 5.2% compared to 18.1% in FY2024.  South Korean equities weighed on regional performance, declining 20.8% relative to a 15.7% advance in 2023.

Latin American equities experienced sharp declines (-30.4%) in 2024, underperforming other emerging markets. Mexico’s market saw a sharp decline of 29.7%, driven by persistent inflation and rising labour costs. Brazilian equities dropped by 29.7%, impacted by more expensive imports, higher interest rates and a weakening currency. In contrast, Peruvian shares rose by 10.1%, supported by export growth and lower interest rates. Colombian equities eked out a 1.5% gain, while Chilean stocks contracted by 4.0% in 2024.

Investor Considerations and Outlook

Domestically, the outlook is cautiously optimistic with some momentum in regional economic activity and moderating inflation. Recently, the Central Bank of Trinidad and Tobago (CBTT) reported that the energy sector is likely to remain muted in the short-term, challenged by constraints in natural gas production. Meanwhile, the non-energy sector is poised for growth, supported by robust business activity and rising consumer demand in the near to medium term. The International Monetary Fund (IMF) in its October 2024 World Economic Outlook projects GDP growth in Latin America and the Caribbean of 2.1% in 2024 and 2.5% in 2025. In Trinidad and Tobago, Real GDP is estimated at 1.6% in 2024 and 2.4% in 2025.

Generally resilient earnings from large -cap stocks on the Trinidad and Tobago Stock Exchange (TTSE) did not translate into price growth. In fact, subdued investor sentiment led to price declines for major market constituents.  This decline in market prices has improved valuations, with many securities now trading at a Price-to-Earnings (P/E) ratios well below their historical averages and more compelling dividend yields, making them attractive for those with a longer investment horizon.

Internationally, equity markets are likely to see a dispersion across stocks, sectors and countries in 2025. In the near-term, there may be heightened sensitivity to policy changes and international relations diplomacy brought about by the new U.S administration, which may significantly influence market sentiment in the U.S and beyond.  The U.S Federal Reserve (FED) began cutting interest rates in September 2024, bringing the federal funds rate down to 4.25 – 4.5% in December 2024. Policymakers now anticipate just two rate cuts in 2025, totalling 50 bps – after raising US inflation expectations for 2025 from 2.2% to 2.5%. According to the IMF, Global growth is expected to remain stable at 3.2% in 2024 and 2025. Notwithstanding these uncertainties, continued enthusiasm in the AI-driven economic evolution is likely to provide support for equity market optimism in the year ahead. 

Diversification across sectors and asset classes remains an effective strategy for reducing overall portfolio risk. For a relatively passive investor, the best approach to gain broader market exposure is to consider equity mutual funds and/or equity index exchange traded funds (ETFs). As always, investors are encouraged to consult a trusted and experienced advisor, such as Bourse, to better position their portfolios for the year ahead.

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