Last week, Nigerian Stock Exchange sustained its bullish momentum, as the NGX ASI gained 1.06% WoW, closing positive in three of the five trading sessions. Buy-interest in large-cap stocks such as GEREGU (+27.45%), and BUAFOODS (+10.50%) drove the local bourse northwards. Hence, at 55,529.21 points, the equities market’s Year-to-Date return increased to 8.35% as market capitalization rose by N2.335 trillion to close at N30.25 trillion.
Market breadth (a measure of investor sentiment) strengthened in the just concluded week, rising from 1.77x to 2.52x as 53 stocks appreciated against 21 stocks that depreciated. GEREGU and CILEASING rose by 27.45% and 20.61% to top the gainer’s chart WoW, respectively, while CHAMS and MULTIVERSE were the top losers, with declines of 10.71% and 10.00%, respectively WoW.
The activity level was mixed as the total trade volume increased by 139.05% while the total value declined by 37.19%. A total turnover of 1.910 billion shares worth N18.44 billion in 20,311.00 deals were traded during the week by investors on the floor of the Exchange. Trading in the top three equities, namely Chams Holding Company Plc, Capital Hotels Plc, and Transnational Corporation Plc (measured by volume), accounted for 1.038 billion shares worth N2.621 billion in 769 deals, contributing 54.33% and 14.22% to the total equity turnover volume and value respectively.
Outlook for the week
We expect bullish sentiments to persist amid depressed yields in the fixed-income market and impressive corporate earnings scheduled to be released this week.
The Nigerian Fixed Income Market
Last week, there was a bearish sentiment in the bond market as three of the tenor yields under coverage inched higher while the 30-years bond closed flat. The yields on the 1, 3, and 10-Years bonds advanced by 90bps, 61bps, and 19bps WoW, respectively. The yields on the 5 years bond compressed by 10bps.
There was a quiet outing in the secondary market for the Nigerian Treasury Bills Market as liquidity in the financial system remains elevated. Consequently, the yields on the 91, 182, and 364-day papers closed flat.
In the Money Market space, the Open Repo (OPR) and Overnight rates increased to 12.13% and 12.43% WoW.
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 bullish sentiments in the global market as all of the six indices under coverage closed higher WoW.
In the African Market, there was mixed sentiment as two of the four indices under coverage increased WoW. The S’A JALSH and NGX, the gainers, rose by 1.76%, and 1.06% WoW respectively. Conversely, the EGX 30 and Kenya NSE, the laggards, fell by 2.24% and 0.24% respectively.
Outlook for the week Market activity would likely be dictated by the release of economic data in the near term.
NAIRA REDESIGN POLICY
The apex court nullified the Federal Government’s naira redesign policy, declaring it as an affront to the 1999 Constitution. Justice Emmanuel Agim, who read the lead judgment, held that the preliminary objections by the defendants (the Attorney General of the Federation, Bayelsa, and Edo states) are dismissed as the court has the jurisdiction to entertain the suit. Citing Section 23(2)1 of the constitution, the court held that the dispute between the Federal Government and states must involve law or facts. The apex court further held that President Muhammadu Buhari in his broadcast admitted that the policy is flawed with a lot of challenges.
The average domestic airfare paid by passengers has increased by 94.78 percent in the past 12 months, National Bureau of Statistics data has shown. In a report titled, “Transport Fare Watch (January 2023),” the NBS said airfares recorded a 0.16 percent increase on a month-on-month basis. According to the report, local airfares rose from an average of N74,586.49 in December 2022 to N74,702.70 in January 2023.
Oil production recovery in Nigeria has boosted overall output of the Organisation of Petroleum Exporting Countries (OPEC) in February 2023. The OPEC oil output rose in February led by a further recovery in Nigerian supply, a Reuters survey found on Tuesday, despite strong adherence by top producers to an agreement by the wider OPEC+ alliance to cut production to support the market. The OPEC, reportedly pumped 28.97 million barrels per day (bpd) last month, the survey found, up 150,000 bpd from January, although output is still down more than 700,000 bpd from September. Nigeria has been battling crude theft and security issues in its oil-producing region, hitting output.
As of October 2022, currency in circulation had risen to N3. 23 trillion; out of which only N500 billion was within the banking system and N2. 7 trillion held permanently in people’s homes. According to the CBN, the total amount of currency-in-circulation in the Nigerian economy has tumbled from N3.3tn to N1.54tn, a 53.3% decline between Nov-2022 and Feb-2023.
Global and Emerging Market Economic Updates
The S&P Global Manufacturing PMI for the US was revised lower to 47.3 in February of 2023 from a preliminary of 47.8, and compared to 46.9 in January. The reading showed manufacturing activity shrank for a fourth consecutive month, amid further contractions in output and new orders, although rates slowed in both instances. Weak domestic and foreign client demand reportedly drove a further drop in total new sales as firms adjusted their spending activity and inventory holdings down accordingly. Also, lower demand for inputs helped spur the greatest improvement in vendor performance since May 2009. Meanwhile, employment rose the most in five months, helping drive a further drop in backlogs of work. At the same time, the rate of charge inflation accelerated again as firms sought to pass on higher costs to customers. Conversely, input costs increased at a softer rate. Finally, business confidence was the second-strongest since May 2022.
The consumer price inflation in the Euro Area inched lower to 8.5 percent in February 2023, the lowest since last May, but above market expectations of 8.2 percent, a preliminary estimate showed. The latest data added to signs that inflationary pressure remained high in Europe and bolstered expectations that the European Central Bank will remain hawkish for longer. Energy inflation slowed to 13.7 percent from 18.9 percent in January, while prices rose at a faster pace for food (15.0 percent vs 14.1 percent), non-energy industrial goods (6.8 percent vs 6.7 percent) and services (4.8 percent vs 4.4 percent). Amongst the Eurozone’s largest economies, inflation accelerated in Germany, France, Spain and the Netherlands, while in Italy, it slowed. Meanwhile, the core rate, which excludes volatile items such as energy and food, rose to a fresh record high of 5.6 percent in February.
Demand for U.S. workers shows signs of slowing, a long-anticipated development that is appearing in private-sector job postings even while government reports indicate the labor market is running hot. Figures from ZipRecruiter Inc. and Recruit Holdings Co., two large online recruiting companies, show the number of job postings on their sites declined more late last year than the Labor Department report on job openings for that period indicated.