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Local Market Economic Updates

Fitch Affirms Union Bank of Nigeria PLC at ‘B-‘; Outlook Stable

Fitch Ratings has affirmed Union Bank of Nigeria PLC’s (UBN) Long-Term Issuer Default Rating (IDR) at ‘B-‘ with a Stable Outlook. Fitch has also affirmed the bank’s National Long-Term Rating at ‘BBB(nga)’ and assigned a Stable Outlook. UBN’s IDRs are driven by its standalone creditworthiness, as expressed by its Viability Rating (VR) of ‘b-‘. The VR balances the bank’s exposure to Nigeria’s challenging operating environment. Read More..

Nigeria’s weak external reserves are a concern

Nigeria’s weak external reserves, as disclosed by CBN’s recent data, is a concern as it highlights external risk and policy challenges, Fitch Ratings has said. Fitch also noted that despite CBN making partial progress in clearing its backlog of unsettled foreign exchange (which further highlights ongoing Fx shortages), its weaker foreign reserve position could affect the pace of exchange-rate liberalization through more constrained FX supply and the potential to weigh on investor sentiment. Read More..

Nigeria’s Trade Deficit Rises to N5.7 Trillion in H2

The Foreign Trade Statistics report shows that Nigeria’s trade deficit in the second quarter of 2023 has hit N5.7 trillion. According to the recent report release by the National Bureau of Statistics (NBS) on Thursday, Nigeria’s total trade stood at N12.7 trillion, while total exports stood at N7tn and total imports amounted to N5.7 trillion. Read more….

Analysts Forecasts Oil Prices Climbing To $100 A Barrel

As Brent crude oil price continued to rise, trading on Wednesday around $90 a barrel for the second straight day, and now up 25 per cent since June due to the prospect of more production cuts by leading oil exporters, analysts have predicted the price may hit $100 a barrel. The surge is sending ripples through the global stock and bond markets. Read more

Global and Emerging Market Economic Updates

US, Saudi Arabia in talks to secure metals in Africa, Wall Street Journal reports

The United States and Saudi Arabia are in talks to secure metals in Africa needed to help them with their energy transitions, the Wall Street Journal reported on Sunday, citing people with knowledge of the talks. A state-backed Saudi venture would buy stakes in mining assets worth $15 billion in African countries. Read more…

Egypt’s inflation reaches record high of 38.2% in July, government data shows

Egypt’s annual inflation rate reached a record high in July, as price hikes continue unabated in the cash-strapped North African country, official figures said Thursday. Consumer prices rose 38.2% from a year earlier, up from 36.8% in June, according to data released by the state-run Central Agency for months. Read more…

G20 Laments War in Ukraine but Avoids Blaming Russia

The G20 summit in India has agreed on a joint declaration, including a statement on the war in Ukraine.

On the first of their two-day meeting, G20 leaders denounced the use of force for territorial gain but stopped short of directly criticising Russia. The Ukrainian government said the statement was “nothing to be proud of”. The summit in Delhi also discussed a number of global issues. Read more..

Niger coup sanctions drive Ghana’s onion prices up, deepen food crisis On most Saturday mornings, the shed of Yakubu Akteniba, an onion seller at Adjen Kotoku market, a 33km drive from Accra, is swamped by customers haggling over fresh produce. But since early August, things have quietened as business has taken a nosedive due to Read more..

Nigerian Equities Market

Banking Stocks Drag NGX to 0.91% Rise, WoW

The Nigerian Equities Market Closed the week in the positive territory as Banking Index appreciated 5.6%. The NGX All-share Index & Market Capitalization appreciated 0.91% each to close last week at 68,143.34 points from 67,527.19 points, and N37.30 trillion respectively. Year-to-Date return stood at 32.96% from 31.76% WoW. Market breadth (a measure of investor sentiment) weakened marginally to closed at 1.49x from 1.96x in the previous week.

Fifty-two (52) equities appreciated in price during the week lower than fifty-five (55) equities in the previous week. Thirty-five (35) equities depreciated in price higher than twenty-eight (28) in the previous week, while sixty-eight (68) equities remained unchanged, lower than seventy-two (72) recorded in the previous week.

The activity level weakened as the total traded shares volume and value declined to 5.34% and 38.50% from 58.17% and 26.45% in the previous week, respectively.

A total turnover of 2.644 billion shares worth N45.450 billion in 44,189 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 2.510 billion shares valued at N32.816 billion that exchanged hands last week in 40,736 deals.

Trading in the top three equities namely Oando Plc, Fidelity Bank Plc and United Bank for

Africa Plc (measured by volume) accounted for 732.276 million shares worth N7.148 billion in 7,020 deals, contributing 27.70% and 15.73% to the total equity turnover volume and value respectively.

Outlook for the week

We expect bullish sentiment in the Equities Market as investors’ confidence seems to outweigh uncertainties in the macroenvironment, and rising inflation.

Nigerian Fixed Income Market

The yield on FGN Bonds under our coverage advanced last week, except for the FGN 1 year Bond which compressed -0.26% to close at 7.53%. The FGN Bonds 3 year, 5 year, and 10 year advanced 0.15%, 0.15%, and 0.45%, to close at 13.00%, 13.90%, and 14.80% respectively. The FGN 30 year Bond remained unchanged at 15.35%.

In the Nigerian Treasury Bills Market, the yields for 182 days and 364 days TB compressed -0.29% and -0.60% to closed at 4.46% and 6.80% respectively.

In the Money Market space, the Open Repo (OPR) close at 1.67% from 21.42%, while Overnight rates close at 2.42% from 21.40% Wow.

Outlook for the week

As inflationary concern continues to heighten in most countries, we expect the short end of the yield curve to advance faster than that of the long end. In other words, a financial uncertainty shock causes a temporary steepening of the yield curve. That is, investors tend to ask for a higher yield in the short-run for short-term instruments in periods of rising interest rates.

The Global and African Market

The global market closed bearish last week as all the indices under our coverage closed in the red, except for the FSTE 100 Index which appreciated by 0.18%. Analyst think the negative performance was partly due to profit-taking, and anticipation for further hikes in benchmark rates as most CBs meet this month, as inflation remain a concern in most economies. 

There was positive performance in African Stocks last week, except for the S’A JALSH, which sloped -1.52%. The EGX 30, KENYA NSE and the NGX ASI appreciated by 0.57%, 0.78%, and 0.91% respectively.

Outlook for the week

We expect buy-sentiment in the global market, but on a slower pace, as investors would likely continue to hedge in equities amid accelerating inflation, to reduce negative yield gap.

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