Mon - Fri : 08:00am - 5:00pm
info@pfi-ltd.com
+234 701 313 9693

Research

The Nigerian Equities Market

Last week, the domestic bourse maintained its positive trajectory as bellwether stocks recorded gains. The NGX ASI advanced by 4.25%, closing positive in four of the five trading sessions during the week. It increased on the back of buying interest in large caps such as OKOMUOIL (+26.47%) and PRESCO (+17.65%). Consequently, at 53,098.46 points, the equities market’s Year-to-Date return increased to 24.30% as market capitalisation rose by 4.26% to close at N28.63 trillion.

Market breadth (a measure of investors’ sentiment) increased over the just concluded week, rising from 1.53x to 1.56x as 50 stocks appreciated against 32 stocks that declined. MCNICHOLS and ROYALEX topped the market gainers with 59.52% and 51.49% respectively WoW, while ACADEMY and IKEJAHOTEL were the top losers with declines of  13.71% and 10.98% respectively WoW.

The activity level strengthened as the total trade volume and value advanced by 13.89% and 38.70% respectively WoW.  A total turnover of 1.816 billion shares worth N27.194 billion in 36,286 deals was traded this week by investors on the floor of the Exchange. Trading in the top three equities namely Transnational Corporation Plc, Guaranty Trust Holding Company Plc and Jaiz Bank Plc (measured by volume) accounted for 459,179 million shares worth N3.294 billion in 3,645 deals, contributing 25.28% and 12.11% to the total equity turnover volume and value respectively.

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 a marginally bullish sentiment in the bond market as three of the five tenor yields under coverage declined, the 1-Year tenor yields closed flat at 3.89% while the yield on the 10-Year tenor bond inched higher by 1bp. The yields on the 3, 5 and 30-Year bonds compressed by 6bps, 26bps and 7bps respectively.

On the flip side, there was negative sentiment in the Nigerian Treasury Bills Market as the yields on the 91, 182 and 364-day paper advanced by 48bps, 10bps and 40bps to close at 2.99%, 3.61% and 4.87% respectively WoW.

In the Money Market space, the Open Repo (OPR) and Overnight (O/N) rates advanced to 8.67% and 9.17% from 4.75% and 4.93% 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 a statement on Friday by its Director of Public Affairs, Ikechukwu Adinde, the NCC said it received a letter from mobile network operators to increase tariffs for voice and short messaging services by a certain percentage, but the request was declined. In a communique released, the NCC said that contrary to MNOs’ agitation to increase tariffs for voice and Short Messaging Services by a certain percentage, the operators will effect no tariff increase without due regulatory approval by the commission.”

Also, Figures obtained from the Central Bank of Nigeria revealed that Nigeria`s monthly debt service rose by $31.46m in one month to $101.29m in January, indicating a 45% increase month-on-month. The data also showed that the government spent $69.83m, $148.57m and $85.23 on debt service repayment in December, November and October 2021, respectively. The Debt Management Office disclosed that Nigeria’s outstanding debt stood at N39.57tn or $95.78bn as of December 2021.

Elsewhere, inaugural Financial Times annual ranking of Africa’s fastest-growing companies provided a snapshot of corporate landscape in a continent where technology, fintech and support-service businesses have had to adapt to a radically altered environment. South Africa emerged the most represented country in the ranking with 24 companies, followed closely by Nigeria (20), Kenya (9) and Egypt (6). According to FT, these markets have attracted the most venture capital, unicorns (companies valued at $1bn+) and would-be unicorn companies. Noteworthy, AFEX Commodities Exchange Ltd was ranked the fastest-growing company in Nigeria for 2022.

Lastly, JPMorgan has removed Nigeria from its list of sovereign bond recommendations that investors should be ‘overweight’ in, saying the country had not taken advantage of high oil prices. The bank analysts said Nigeria’s national oil company (NNPC) did not transfer any revenue to the government from January to March due to petrol subsidies and low oil production. On the other hand, JPMorgan replaced Nigeria in the list with Serbia and Uzbekistan in the ‘overweight’ category.

Global and Emerging Market Economic Updates

U.S consumer prices rose at an annual pace of 8.3% last month, more than economists’ expectations and staying at a four-decade high. Although the consumer price index moderated for the first time in eight months, it was a step down from the 8.5% increase recorded in March and was slightly higher than economists’ expectations of an 8.1% rise. In addition to the jump in prices from last year, consumer prices climbed another 0.3% from the previous month, Slower than the 1.2% rise recorded in March, fueled by soaring energy and food costs tied to Russia’s invasion of Ukraine.

In the UK, their economy shrunk in March as wholesale and retail trade sectors fell and the motor industry continued on a negative growth trajectory. Gross domestic product (GDP) fell by 0.1% in March, tailing a month of no growth in February, which revised down from the 0.1% expected increase. Over the first three months of 2022, GDP has risen 0.8%, below expectations of 1% growth. In March, a struggling services sector was the main contributor to a fall in GDP, according to the latest Office for National Statistics (ONS) data.

In Ghana, the inflation rate climbed to the highest level in more than 18 years in April, underscoring the central bank’s dilemma in balancing its efforts to stop intolerable price growth and boost the economy. Annual inflation quickened to 23.6%, the highest since January 2004, from 19.4% in March. Headline inflation is now more than twice the top of the central bank’s target band of 6% to 10% and has been above the range for eight months. Food-price growth surged to 26.6% year-on-year from 22.4% in March and non-food inflation accelerated to 21.3% in April from 17% the previous month.

Elsewhere, Tesla CEO Elon Musk announced last Friday he has halted his $44 billion Twitter takeover. Musk said he needed to resolve concerns over the number of fake or spam accounts on the platform. Musk’s tweet contained a link to a May 2 Reuters article on Twitter’s public filings, in which the company said fake, or spam accounts only accounted for about 5% of its overall user base.