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Nigerian Bourse Closes the Week Negative as NGX Declines by 0.96% WoW.

Last week, the bears suppressed the bulls in the local bourse, as the NGX ASI sheds 0.96% WoW, closing negative in one of the five trading sessions. Profit-taking in large-cap stocks such as AIRTELAFRI (-6.02%), and FBNH (-1.70%) drove the local bourse southwards. Hence, at 53,804.46 points, the equities market’s Year-to-Date return decreased to 4.98% as market capitalization fell by N280 million to close at N29.31 trillion.

Market breadth (a measure of investor sentiment) strengthened in the just concluded week, rising from 0.53x to 1.33x as 36 stocks appreciated against 27 stocks that depreciated. TRIPPLEG and LIVINGTRUST rose by 45.26% and 16.16% to top the gainer’s chart WoW, respectively, while CWG and FIDELITY were the top losers, with declines of 17.35% and 14.70%, respectively WoW.

The activity level strengthened as the total trade volume and value decreased by 75.09% and 17.42%. A total turnover of 944.293 million shares worth N22.71 billion in 18,615.00 deals were traded during the week by investors on the floor of the Exchange. Trading in the top three equities, namely Guaranty Trust Holding Company, United Bank for Africa Plc, and FBN Holdings Plc (measured by volume), accounted for 249.667 million shares worth N3.915 billion in 1,984 deals, contributing 33.20% and 19.03% to the total equity turnover volume and value respectively.

Outlook for the week

We expect profit-taking to drag the equities market southwards amid rising yields in the fixed-income market.

The Nigerian Fixed Income Market

Last week, there was bearish sentiment in the bond market as all of the tenor yields under coverage inched higher. The yields on the 1, 3, 5, 10 and 30-Years bonds advanced by 248bps, 40bps, 27bps, 4bps and 1bp WoW, respectively.

Similarly, there was bearish sentiment in the secondary market for the Nigerian Treasury Bills Market as liquidity in the financial system remain thins out. Consequently, the yields on the 91, and 182-day papers inched higher 272bps and 395bps WoW, respectively, while the yield on the 364-day paper compressed by 7bps.

In the Money Market space, the Open Repo (OPR) and Overnight rates increased to 17.13% and 17.81% WoW, respectively.

Outlook for the week

We expect market activity in the fixed-income market to be influenced by liquidity levels.

The Global and African Market

Investor’s sentiments was mixed in the global market as three of the six indices under coverage closed positive WoW.

In the African Market, there was mixed sentiment as two of the four indices under coverage increased WoW. The S’A JALSH and EGX 30, the gainers, rose by 0.36%, and 1.77% WoW respectively. Conversely, the Kenya NSE and NGX ASI, the losers, fell by 0.18% and 0.96% respectively.

Outlook for the week

Market activity would likely be dictated by the release of economic data in the near term.

Local Economic Updates

The annual inflation rate in Nigeria accelerated to 21.82% in January 2023, the highest since September 2005, from 21.34% in the prior month, against market expectations of a further slowdown to 21.3%. Soaring food prices and a weaker naira currency were the main drivers. Prices of food, which is the most relevant in the CPI basket, recorded an upturn to 24.32% in January from 23.75% in the prior month. On a monthly basis, consumer prices surged by 1.87%, the most in almost 16 years, after a 1.71% increase in the previous month.

In its sustained effort to wet the country with petrol and finally end the current scarcity and queues being experienced in the past few months, the Nigerian National Petroleum Company Limited (NNPC) has ramped up supply of products to major and minor depots across the country with another 502.21 million litres last week. The latest volume of supply is coming after the NNPC had penultimate week pumped 450 million litres to marketing companies in proof of its claim that the cause of the scarcity was distribution rather than supply. The company disclosed this in its nationwide weekly petrol evacuation and dispatch report for Week 6, 2023, which it posted on its Twitter handle. It disclosed that its average daily evacuation for the week stood at 71 million litres. Relatedly, NNPC has also disclosed that it had perfected plans to resume the pumping of petrol to depots through the Atlas-Cove pipeline, otherwise known as the System 2-B pipeline, from yesterday (Monday).

The Centre for the Promotion of Private Enterprise (CPPE) has called on President Muhammadu Buhari and the Central Bank of Nigeria (CBN) to give the currency swap process a human face. In a statement sent to Nairametrics on Sunday, the CPPE Chief Executive Officer, Dr Muda Yusuf, said the agony and trauma inflicted by the entire management of the policy are unspeakable. He said: “Accordingly, we plead with the CBN to allow the old notes to be deposited at the commercial banks to ease the current pains and ordeal of returning the old notes.”

Global and Emerging Market Economic Updates

The Producer Price Index, which measures what suppliers are charging businesses, rose 6% for the year ending in January. That’s down from December’s revised 6.5% and is at its lowest level since March 2021. On a monthly basis, US producer prices jumped by 0.7% from December. It’s the largest month-on-month gain since June 2022, BLS data shows. Economists were projecting year-over-year growth of 5.4% and a monthly gain of 0.4%, according to Refinitiv estimates. The January PPI data showed a rebound in supplier goods prices, an increase driven by higher energy prices, BLS data shows. The final demand goods index popped up 1.2% last month — the highest gain since June 2022 — after declining for three consecutive months.

The annual inflation rate in the US slowed only slightly to 6.4% in January of 2023 from 6.5% in December, less than market forecasts of 6.2%. Still, it is the lowest reading since October of 2021, with energy prices rising 8.7% while food cost went up 10.1%. Although inflation has shown signs of peaking at 9.1% in June last year, it remains more than three times above the Fed’s 2% target and continues to point to a broad-based advance on the general price level, particularly services and housing.

Annual inflation rate in the UK fell to 10.1% in January of 2023 from 10.5% in December, below market forecasts of 10.3%. Inflation fell for a third consecutive month to the lowest since September last year. The largest downward contribution came from transport (3.1% vs 6.5%), particularly passenger transport and motor fuels; and restaurants and hotels (10.8% vs 11.3%). Prices also rose at a slower pace for food and non-alcoholic beverages (16.7% vs 16.8%), clothing and footwear (6.2% vs 6.5%) and furniture (9.2% vs 9.8%), in line with traditional New Year discounting. In contrast, inflation accelerated for housing and utilities (26.7% vs 26.6%), recreation and culture (5% vs 4.9%), health (6.3% vs 5.1%) and alcoholic beverages and tobacco (5.1% vs 3.7%). Compared to the previous month, the CPI fell 0.6%, the first decline in a year and the biggest since January of 2019. Major declines were seen for fuels (-3.8%) and air transportation (-41.7%).

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