Last week, the local Bourse closed lower, as the NGX ASI sheds 0.04% WoW, closing negative in four of the five trading sessions. Profit-taking in large-cap stocks such as BUACEMENT (-1.60%), STANBIC (-5.80%), and NB (-4.50%) dragged the local bourse southwards. Hence, at 54,892.53 points, the equities market’s Year-to-Date return decreased to 7.11% as market capitalization fell by N12 billion to close at N29.90 trillion.
Market breadth (a measure of investor sentiment) strengthened in the just concluded week, increasing from 0.40x to 1.,40x as 28 stocks appreciated against 27 stocks that depreciated. SUNUASSUR and LASACO rose by 9.09% and 7.14% to top the gainer’s chart WoW, respectively, while NCR and IKEJAHOTEL were the top losers, with price depreciation of 18.69% and 18.25%, WoW, respectively.
The activity was mixed as the total trade volume and value increased by 98.12%, while the total value decreased by 6.50%. A total turnover of 1.69 billion shares worth N11.07 billion in 14019.00 deals were traded during the week by investors on the floor of the Exchange. Trading in the top three equities, namely Neimeth International Pharmaceuticals Plc, Transnational Corporation Plc, and United Bank for Africa Plc (measured by volume), accounted for 1.248 billion shares worth N2.347 billion in 1,102 deals, contributing 73.89% and 21.21% 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 bearish sentiment in the bond market as four of the tenor yields under coverage inched higher, the yields on the 1, 3, 5, and 30-year bond advanced by 163bps, 210bps, 88bps, and 15bps WoW, respectively while the yield on the 10-year bond compressed by 6bps.
There was bearish sentiment in the secondary market for the Nigerian Treasury Bills Market. Consequently, the yields on the 91, 182, and 364-day paper advanced by 39bps, 139bps, and 66bps respectively.
In the Money Market space, the Open Repo (OPR) and Overnight rates increased to 18.88% and 18.25% 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 all of the six indices under coverage closed higher WoW.
In the African Market, there was bullish sentiment as three of the four indices under coverage increased WoW. The S’A JALSH, EGX 30, and NSE, the gainers rose by 2.99%, 6.26% and 7.27% WoW respectively, while NGX ASI the loser, fell by 0.04% WoW.
Outlook for the week
Market activity would likely be dictated by the release of economic data in the near term.
Local Economic Updates
The Federal Government, on Tuesday, cautioned states to avoid a repeat of what happened in 2022, where over 600 persons were killed by floods and properties worth billions of naira were destroyed across various states. It gave the warning at an event in Abuja, where the looming heavy flood situation earlier forecasted by two weather and climate agencies of the Federal Government. The NMA (Nigerian Meteorological Agency), as well as the NHSA(Nigeria Hydrological Services Agency), which are both agencies of the Federal Government, had predicted that this year would witness heavy floods, based on their scientific findings. We have received the forecast for this year. We have noted that the rainy season this year will be longer and that states have to be proactive to mitigate the effects of flooding and other natural disasters.
The MPC committee has voted to raise the MPR by 50 basis points to 18%, retain the asymmetric corridor at +100 and -500 basis points around the MPR. Members resolved by a majority vote to raise money policy rate NPR by 50 basis points. In summary, 10 members voted to raise MPR by 50 basis points, one member voted to raise MPI by 25 basis points, and one member voted to hold the MPR. All members voted to keep all other parameters constant. The MPC voted to raise MPR to 18%, retain a symmetric corridor plus 100 and minus 500 points around the MPR, retain the CRR at 32.5% and retained the liquidity ratio at 30 percent
The Federal Government has announced the removal of its proposed 5% excise duty on telecommunication services. The exemption of the digital economy sector from the 5% excise duty to be paid is because the additional burden on telecom sector will increase the sufferings of Nigerians and that other sectors that are not making as much contribution to the economy should be challenged to do more and pay the 5% excise duty. There is no need for excise duty in the telecom sector because the industry is already heavily taxed up to 41 taxes. The sector has been contributing hugely to Nigeria’s economy, more tax burden destroys the industry. We increased revenue generated by 594 per cent from N51 billion quarterly to N481 billion quarterly. This is the only sector where the prices of services have been reduced. here is no justification for the government to impose more burden on its poor citizens
Global and Emerging Market Economic Updates
The Federal Reserve raised interest rates again Wednesday to a 16-year high, making borrowing costs between banks even more expensive and shaking off calls to take a time-out on hikes to focus on cooling the banking crisis. The Fed’s policy-setting committee said it will hike the federal funds rate by 25 basis points to between 4.75% and 5% following its two-day meeting amid the economic turbulence. Interest rates are now at their highest level since late 2007.
The head of the Bank of England has said he is “much more hopeful” for the UK economy, as interest rates were raised to their highest for 14 years. The decision to lift rates to 4.25% from 4% came after the inflation rate rose unexpectedly last month. It also follows the collapse of two US banks and the rescue of Swiss lender Credit Suisse, but the Bank said the UK financial system was “resilient”. The Bank also said the UK was no longer heading into an immediate recession. “We were really a bit on a knife edge as to whether there would be a recession… but I’m a bit more optimistic now,” said Bank governor Andrew Bailey.
Sales of previously owned homes in the US rose 14.5% in February compared with January, according to a seasonally adjusted count by the National Association of Realtors. It was the first monthly gain in 12 months and the largest increase since July 2020, just after the start of the Covid-19 pandemic. Higher mortgage rates have been cooling home prices since last summer, and for the first time in a record 131 consecutive months — nearly 11 years prices were lower on a year-over-year comparison.
The number of Americans filing for unemployment benefits fell by 1,000 from the prior week to 191,000 on the week ending March 18th, compared to expectations of 197,000. The result provided further evidence of a stubbornly tight labor market, in line with the hot payroll figures for February and the Federal Reserve’s outlook of low unemployment. The tight job market forces employers to raise wages to attract and keep staff, magnifying inflationary pressure on the American economy and adding leeway for the central bank to continue tightening monetary policy.