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Nigeria Stocks Close Positive as Market Capitalization Gains N24 Billion

The local bourse closed positive, reversing previous losses as the NGX ASI gained 0.46% WoW, closing positive in 2 of the four trading sessions. It rose on bargain hunting in bellwether stocks such as BUACEMENT (+8.65%) and GTCO (+5.29%). Consequently, at 47,569.04 points, the equities market’s Year-to-Date return increased to 11.36% as market capitalization rose by 0.46% to close at N25.91 trillion.

Market breadth (a measure of investor sentiment) strengthened in the just concluded week, advancing from 0.24x to 1.04x as 25 stocks appreciated against 24 stocks that depreciated. MAYBAKER and IKEJA HOTEL topped the market gainers with 13.82% and 9.73% WoW, respectively, while UACN and FTNCOCOA were the top losers, with declines of 12.20% and 10.00%, respectively WoW.

The activity level was mixed as the total trade volume declined by 16.04%, and the value advanced by 34.89%. A total turnover of 0.49 billion shares worth N11.92 billion in 14,350 deals were traded during the week by investors on the floor of the Exchange. Trading in the top three equities, namely Guaranty Trust Holding Company Plc, Mutual Benefits Assurance Plc, and FBN Holdings Plc (measured by volume), accounted for 211.080 million shares worth N2.48 billion in 2,834 deals, contributing 42.92% and 20.78% to the total equity turnover volume and value respectively.

Outlook for the week

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

The Nigerian Fixed Income Market

Last week, there was bearish sentiment in the bond market as all four tenor yields under coverage closed higher. The yields on the 3, 5, 10, and 30-Year bonds advanced by 21bps, 1bp, 51bps, and 26bps, respectively WoW.

There was bullish sentiment in the Nigerian Treasury Bills Market as the 91, 182, and 364-day yields increased by 1bp each WoW.

In the Money Market space, the Open Repo (OPR) and Overnight (O/N) rates decreased to 16.17% and 16.50% from 16.25% and 17.25%, 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.

Global And African Markets

Investor’s sentiments were mildly bearish in the global market as four of the six indices under coverage closed lower WoW.

In the African Market, there was mixed sentiment as 2 of  the four indices under coverage declined WoW. The NSE and NGX ASI, the gainers, improved by 2.83% and 0.49% WoW. Conversely, the losers of the S’A JALSH and EGX 30 fell by 2.14% and 0.88%, respectively.

 Outlook for the week

Market activity would likely be dictated by the hawkish stance of the FOMC in the near term.

Local Economic Updates

Last week, the Finance Minister, Zainab Ahmed, stated that Nigeria is considering restructuring its debt and extending the repayment period of its credit obligations and has appointed consultants to advise the government as it faces a rising debt-service burden. Later in the week, the DMO released a statement stating that the minister’s comments were taken out of context. The Federal Government also plans to refinance domestic debt obligations due this year and next. At the same time, the country’s N20.0tn ($45.4bn) in outstanding borrowings from the central bank will be bundled into government bonds.

Nigerian Finance Minister, Zainab Ahmed

The International Monetary Fund (IMF) revised Nigeria’s 2022 economic growth projection to 3.0% from its 3.2% projection in Jul-2022 due to tighter financial and monetary conditions. This weaker outlook reflects lower trading partner growth and a negative shift in the commodity terms of trade. The IMF also downgraded the economic growth projection for Sub-Sahara Africa to 3.7% from 4.00%.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has disclosed that the Dangote Petroleum Refinery, upon which the nation’s hope rests for fuel sufficiency, is now 97 percent completed. The Agency has also commended the work done on the project. The refinery, with 650,000 barrels per-day installed capacity, is expected to double the total output of Nigeria’s existing ailing refining infrastructure and meet 100 percent of the Nigerian requirement of all refined products will pump out fuel any moment soon, the Agency declared

The federal government has ordered the reopening of the Obajana cement plant shut down by the Kogi State Assembly last week. The order was part of decisions that arrived at during Friday’s National Security Council meeting in Abuja. The council also advised that all that issues in contention be resolved legally, adding that the government’s commitment to providing employment was not negotiable.

Dangote Cement, Obajana cement factory Kogi State.

 Widespread flooding caused by extreme rainfall and the release of excess water from a dam in neighboring Cameroon has left 1.4 million Nigerians displaced and claimed 500 lives, according to government officials. The floods also injured 1,546 people, inundated 70,566 hectares of farmland, and “totally damaged” 45,249 homes, said Nasir Sani-Gwarzo, the permanent secretary in Nigeria’s Ministry of Humanitarian Affairs, Disaster Management and Social Development. Flooding has affected 27 of Nigeria’s 36 states.

Global and Emerging Market Economic Updates

The rapid rise in US consumer prices showed no signs of abating in September, prompting a see-saw trading session on Wall Street as investors weighed whether the Federal Reserve would have to become even more aggressive to slow rampant inflation. The consumer price index’s core measure of inflation, which strips out volatile energy and food costs, rose 6.6 percent annually last month, faster than the 6.3 percent rate in August — and its fastest pace in four decades. The increase in the overall CPI the previous month, including energy and food, rose 8.2 percent over a year earlier, little changed from the 8.3 percent annual rise recorded in August. The last month’s overall CPI rose 0.4 percent while the core measure increased by 0.6 percent.

According to IMF, Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001, except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024. Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook

British Prime Minister Liz Truss has fired her finance minister Kwasi Kwarteng, the BBC reported on Friday, shortly before she is expected to scrap parts of his economic package to survive the market and political turmoil gripping the country. Kwarteng’s challenges arose after he implemented a UK Economic policy that would cut the top tax rate from 45% to 40% from April 23rd of next year, sending the UK Pound spiraling down as investors scampered. The move was criticized because the government did not show how it would fund the tax cuts suggesting that the new prime minister, Liz Truss, and her Chancellor, Kwasi Kwarteng, seemed bereft of reality.

The Biden administration is weighing restricting imports of Russian aluminum as it charts possible responses to Moscow’s military escalation in Ukraine, a person briefed on the conversations told Reuters. Such a move, which has not been finalized, would likely boost global prices for the metal used in a wide range of consumer products and could reverse a previous White House stance that such sanctions could wreak havoc on global markets.