Local Bourse Extends Bullish Run as NGX ASI Gained 0.48% WoW.
Local Bourse extended its bullish run last week, as the NGX ASI gained 0.48% WoW, closing positive in three of the five trading sessions. Buy-interest in large-cap stocks such as DANGCEM (+3.60%), and MTNN (+1.40%) drove the local bourse northwards. Hence, at 55,794.51 points, the equities market’s Year-to-Date return increased to 8.90% as market capitalization rose by N145 billion to close at N30.39 trillion.
Market breadth (a measure of investor sentiment) weakened in the just concluded week, declining from 2.52x to 0.54x as 41 stocks depreciated against 22 stocks that appreciated. MRS and CONOIL fell by 18.99% and 18.89% to top the losers’ chart WoW, respectively, while JBERGER and TRANEX were the top gainers, with price appreciation of 10.00% and 9.88%, respectively WoW.
The activity was mixed as the total trade volume decreased by 46.44% while total value increased by 9.68%. A total turnover of 1.02 trillion shares worth N20.22 billion in 18650.00 deals were traded during the week by investors on the floor of the Exchange. Trading in the top three equities, namely Transnational Corporation Plc, Guarantee Trust Holding Company Plc, and BUA Cement Plc (measured by volume), accounted for 447.809 million shares worth N9.556 billion in 2,018 deals, contributing 43.76% and 47.26% 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.
The Nigerian Fixed Income Market
Last week, there was bullish sentiment in the bond market as three of the tenor yields under coverage inched lower while the yield on the 10-year bond closed flat. The yields on the 1, 3, 5 and 30-Years bonds compressed by 24bps, 89bps, 26bps and 20bps WoW, respectively.
There was mixed sentiment in the secondary market for the Nigerian Treasury Bills Market while the yield on the 364-day paper closed flat. Consequently, the yields on the 91-day paper compressed by 23bps while closing flat on the 182-day paper, which advanced by 34bps.
In the Money Market space, the Open Repo (OPR) and Overnight rates decreased to 10.50% and 10.81% 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 bullish in the global market as four of the six indices under coverage closed lower WoW.
In the African Market, there was bearish sentiment as three of the four indices under coverage decreased WoW. The S’A JALSH, EGX 30, and NSE, the losers, fell by 2.35%, 5.29%, and 6.56% WoW respectively.
Outlook for the week
Market activity would likely be dictated by the release of economic data in the near term.
Local Economic Updates
Nigeria’s foreign trade fell in the fourth quarter of 2022 due to a decline in import trade, the National Bureau of Statistics (NBS) has said. The statistics bureau disclosed this in its Foreign Trade Goods Statistics Q4 2022 published on Thursday. The NBS said total merchandise trade stood at N11.77 trillion in the fourth quarter of 2022, indicating a decline of 4.52 percent over the value recorded in the third quarter of 2022. The figure also represents a slight rise of 0.13 percent when compared to the value recorded in the fourth quarter of 2021.The statistical office said the export trade stood at N6.35 trillion showing an increase of 7.17 percent over the value recorded in the preceding quarter and increased by 10.28 percent over the preceding year’s corresponding period.
The Stanbic IBTC Bank Nigeria PMI sank to 44.7 in February of 2023, from 53.5 in the prior month. The latest reading pointed to the first contraction in private sector business conditions in over two years, ending a 31-month sequence of expansion. Steep reductions in output and new orders were observed, attributed to the cash shortage challenges experienced across the country during the month. Consequently, firms scaled back their purchasing activity and employment. Meanwhile, persistent fuel shortages saw petrol pump prices increase, which added to price pressures and led to supplier delivery delays.
The Central Bank of Nigeria Wednesday issued operational guidelines for open banking in Nigeria. The operational guidelines outline the procedures that govern how banks and other financial institutions are permitted to access and manage customer data. Open banking is a financial services concept that allows third-party financial service providers to access banking data, typically through application programming interfaces (APIs), with the explicit consent of the customers. It basically allows customers to share their banking data with other financial service providers, enabling them to access a wider range of products and services.
Global and Emerging Market Economic Updates
Silicon Valley, the country’s 16th largest bank, failed after depositors – mostly technology workers and venture capital-backed companies – hurried to withdraw their money this week as anxiety over the bank’s situation spread. The bank could no longer cope with the massive withdrawals of its customers and its last attempts to raise new money did not succeed. US authorities therefore officially took possession of the bank and entrusted its management to the U.S. agency responsible for guaranteeing deposits, the Federal Deposit Insurance Corporation (FDIC). Little known to the general public, SVB had specialized in financing start-ups and had become one of the largest banks in the US by asset size: at the end of 2022, it had $209 billion (€196 billion) in assets and about $175.4 billion (€164.5 billion) in deposits. Also, Job creation decelerated in February but was still stronger than expected despite the Federal Reserve’s efforts to slow the economy and bring down inflation. Nonfarm payrolls rose by 311,000 for the month, the Labor Department reported Friday. That was above the 225,000 Dow Jones estimate and a sign that the employment market is still hot.
Powell’s comments raise the possibility that the Fed will increase its key interest rate by a half-percentage point at its next meeting March 21-22, after having carried out a quarter-point hike in early February. The Fed previously raised its benchmark rate by a half-point in December and imposed four three-quarter-point hikes before that. Over the past year, the central bank has raised its key rate, which affects many consumer and business loans, eight times. The Federal Reserve Chair Jerome Powell said officials were keeping their options open over how much to raise interest rates this month after investors interpreted his comments Tuesday to suggest a half-percentage-point increase was likely. His comments over two days of congressional hearings show how the central bank is contemplating a shift in tactics to keep up with an economy showing surprising strength after a year of rate increases.
The U.K. economy grew by 0.3% in January, official figures showed on Friday, exceeding expectations as it continues to fend off what economists see as an inevitable recession. Economists polled by Reuters had projected a 0.1% monthly increase in GDP. GDP was flat over the three months to the end of January, the Office for National Statistics said. The services sector grew by 0.5% in January 2023, after falling by 0.8% in December 2022, with the largest contributions to growth in January 2023 coming from education, transport and storage, human health activities, and arts, entertainment and recreation activities, all of which have rebounded after falls in December 2022.