2020 ‘no pretty picture’ for companies, investors

Barbadian businesses and investors looking for strong returns on their holdings are in for a major disappointment, a fund manager said today, warning of the impact of the COVID-19 crisis on the economy.

With major corporate offerings reduced, and in some cases no dividend payments, as firms hunker down for what could be a length period of volatility, Investment Director of Fortress Fund Managers Roger Cave said bluntly: “2020 is not going to be a pretty picture for most companies operating in the region.”

During a virtual news conference to discuss its mutual funds’ performance over the last quarter ending  March 31, Cave acknowledged that since the COVID-19 pandemic, companies large and small have been struggling.

He told reporters: “Businesses would have taken a hit to their earnings as we have seen everywhere else in the world. Our equity prices have adjusted on the Trinidad [Stock Exchange] and to a lesser extent on the Barbados exchange.

“In the short term, as we see [financial] results come out from June, there is going to be a significant hit . . . to corporate earnings, but we have to remember that investing in equities in a long-term investment so you are looking forward.”

Fortress’s own parent, Cave Shepherd & Co Ltd , has told its investors the retail and financial services conglomerate was seeking to maintain high reserves in order to ride out the COVID-19 induced global
downturn.

In other developments, One Caribbean Media, parent of the Nation Publishing Company and Starcom Network, announced that it would not offer a final dividend to its shareholders. The Massy Group, a major player in the retail and energy sector, has declared significantly reduced earnings per share for its investors.

“So 2020 is not going to be a pretty picture for most of the companies operating in the region. Supermarkets and food are probably the one area that would have held up better… for businesses. However, it will take time for our economies to recover,” Cave told journalists.

Barbados and other tourism-dependent Caribbean economies are likely to recover only after a recovery process is staged by larger economies in Europe and North America, he predicted.

Cave said: “We are seeing some countries in Europe removing their quarantines and reopening to international travel. It is still unknown how long that will take and how we will reopen our borders. As [we are] dependent on tourism, it is going to be longer here.”