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NGX ASI Advanced by 1.99%, closing positive in all four trading sessions of the week

Positive sentiment returned in the local bourse as large-cap stocks recorded gains throughout the trading week. NGX ASI advanced by 1.99%, closing positive in all of the four trading sessions during the week. It increased on the back of buying interest in large caps such as UACN (+13.86%) and NB (+11.82%). Consequently, at 47,558.45 points, the equities market’s Year-to-Date return increased to 11.34% as market capitalisation rose by 1.99% to close at N25.64 trillion.

Market breadth (a measure of investor sentiment) increased over the just concluded week, rising from 1.06x to 2.83x as 51 stocks appreciated against 18 stocks that declined. MEYER and LEARNAFRCA topped the market gainers with 41.59% and 20.23% WoW respectively, while ACADEMY and PRESTIGE were the top losers with declines of  18.64% and 11.11% respectively WoW.

The activity level was positive as the total trade volume and value advanced by 9.94% and 106.90% WoW. A total turnover of 1.247 billion shares worth N22.372 billion in 23,406 deals was traded this week by investors on the floor of the Exchange. Trading in the top three equities namely Guaranty Trust Holding Company Plc, Zenith Bank Plc and Fidelity Bank Plc (measured by volume) accounted for 429.657 million shares worth N7.786 billion in 5,871 deals, contributing 34.45% and 34.80% to the total equity turnover volume and value respectively

Graph depicting NGX Sectorial Perfomamnce

Outlook for the week

We expect positive performance to persist in the coming week as the equities market still presents decent opportunities for investors chasing positive real returns on investments.

The Nigerian Fixed Income

Last week, there was mixed sentiment in the bond market as two of the five tenor yields under coverage inched higher, the 1 and 30-Year tenor yields closed flat at 3.89% and 12.85% respectively while the yield on the 3-Year tenor bond compressed by 5bps. The yields on the 5 and 10-Year bonds increased by 55bps and 1bp respectively.

There was bearish sentiment in the Nigerian Treasury Bills Market as the 91 and 182-day paper yields increased by 100bps and 16bps to close at 2.88% and 3.16% respectively WoW. The yield on the 364-day paper compressed by 5bps to close at 4.20%.

In the Money Market space, the Open Repo (OPR) and Overnight (O/N) rates increased to 10.83% and 11.17% from 10.17% and 10.67% respectively WoW.

Outlook for the week

We expect market activity in the fixed income market to be influenced by liquidity levels and foreign investor participation.

Local Economic Updates

In the released CPI report by NBS last Friday,  Consumer Price Index rose to 15.92 percent in March. This new rate is the country’s highest recorded since November 2021, when the inflation rate dropped to 15.99 percent. As a result, food inflation rose to 17.2% YoY in the review month, an uptick compared to the 17.11% recorded in the preceding month. This rise in the food index was caused by increases in prices of Bread and cereals, food product, Potatoes, yam and other tubers, Fish, Meat, Oils and fats. As a result, on a month-on-month basis, the food sub-index increased to 1.99% in March 2022; this was up by 0.12% points from 1.87% points recorded in February 2022. On the other hand, the core inflation rate dropped to 13.91% in March from 14.01% recorded in February 2022. The rise in the core index was attributed to the increase in the prices of Gas, Garments, Cleaning, repair, and hire of clothing, shoes and other footwear.

The Governor of the Central Bank of Nigeria, Godwin Emefiele, has ordered the immediate release of N3.5bn as a rebate to 150 exporters who participated in the Race To $200bn scheme. This was one of the Bankers’ Committee meeting outcomes held on Thursday. In February, the CBN had disclosed that it would pay exporters N65 for every $1 sold into the economy through the Investors & Exporters window. According to the CBN governor, the rebate will be paid quarterly to qualified exporters. The essence is to boost the influx of foreign exchange into the country Data from the CBN reveals that $60m has come into the country since the programme commenced in February.

Last week Monday, European Union (EU) Ambassador to Nigeria, Samuela Isopi, visited the Management of the NNPC Ltd to strengthen the EU’s partnership with Nigeria in the energy sector. The ambassador noted that due to the current geopolitical situation in Europe, the continent was interested in strengthening its cooperation with Nigeria, particularly in a possible increase in the supplies of Liquefied Natural Gas (LNG). Responding, the GMD/CEO of NNPC Ltd, Mallam Mele. Kyari assured the European delegation that the Company will continue to add more value to its business, particularly by increasing gas supply to the global market and enhancing domestic gas utilisation.

Elsewhere, Nigeria’s oil sector continues to grapple with low crude oil production, reflecting the sector’s age-long challenges. Based on the OPEC’s Monthly Oil Market Report (MOMR), Nigeria’s crude oil production (excluding condensates) averaged 1.35mb/d in March (February: 1.38mb/d)- 21.5% below the OPEC+ production agreement (1.72mb/d) for the month. Accordingly, average crude oil production settled at 1.38mb/d in Q1-22.

Global and Emerging Market Economic Updates

Last week, the U.S, the headline consumer price index, which measures a wide-ranging basket of goods and services, rose by 8.5% from a year ago, the fastest annual gain since December 1981. Excluding food and energy, core CPI increased 6.5% on a 12-month basis, in line with the expectation. Shelter costs, which make up about one-third of the CPI weighting, increased another 0.5%, making the 12-month gain a blistering 5%, the highest since May 1991. Food rose 1% for the month and 8.8% over the year, as prices for goods such as rice, ground beef, citrus fruits, and fresh vegetables all posted gains of more than 2% in March. Over the past year, prices at the pump have climbed 48 percent, including an 18.3 percent rise between March and February, boosted by the war in Ukraine and the pressure it is exerting on supply.

Similarly, the UK inflation rose to 7% in March, hitting a 30-year high after fuel prices surged and putting more pressure on the Bank of England to increase interest rates again. According to data published by the Office for National Statistics on Wednesday, the increase in consumer prices was up from an annual rate of 6.2 percent in February and ten times the 0.7 percent recorded in March 2021. As a result, inflation in March was more than three times the Bank of England’s target of 2 percent and higher than the “around 6 percent” rate forecast at its last meeting. Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, rose to 5.7 percent in March, up from 0.9 percent in the same month last year. Food prices rose 5.9 percent, the highest in a decade, with most types of food registering annual increases above 5 percent, including bread, meat, milk, and fruit.

Elsewhere, oil prices settled higher on Thursday as lockdowns eased in Shanghai. Russian oil and gas condensate production fell to 2020 lows amidst OPEC warning that it would be impossible to replace 7million BPD of Russian oil and other oil liquids exports lost in sanctions or voluntary actions. Russian oil and gas condensate production fell below 10million barrels per day (BPD) on Monday to its lowest since July 2020.