Weekly Economic and Financial Commentary – WE 12th Apr, 2019


Saturday, April 13, 2019  / 08:46AM / By ARM Research 


Global Economy

In the US, the Bureau of Labor Statistics released the consumer price index for the month of March, which showed an uptick in inflation to 1.9% YoY from 1.5% recorded in the prior month, mirroring increases in food prices and slower moderation in energy prices. Similarly, month on month inflation inched up to 0.4% MoM (vs 0.2% in February), for the first time since October 2018, reflecting the jump in energy prices (+3.5% MoM), which accounted for 60% of the total increase.


Elsewhere, China’s trade balance surged to $32.6 billion surplus in March, compared to a deficit of $5.77 billion reported in March 2018, mirroring a jump in exports by 14.2% YoY to $198.7 bil lion YoY and a decline in imports by 7.6% YoY to $166 billion. Over in Britain, the UK and EU leaders reached an agreement to delay Brexit until October 31st, averting the prospect of the U.K leaving the bloc without a deal today.


Following this development, the U.K would be expected to participate in the European parliamentary elections scheduled for May 2019 if they are unable to conclude on the withdrawal deal by then, or risk leaving the union without a deal on the 1st of June.


Domestic Economy

Less than three months after the International Monetary Fund (IMF) cuts its growth forecast for Nigeria to 2.0%, the IMF has now revised its growth forecast higher by 10 bps to 2.1% hinged on the expectation of stability in oil price over 2019. Particularly, crude oil price has remained stable over Q1 19 on the back of further OPEC cuts and tensions in Libya and Venezuela.


Meanwhile, the National Bureau of Statistics released data for Nigerian Domestic and foreign Debt for FY 2018 alongside states borrowings. Over 2018, total borrowings by the state governments increased 12% YoY to N5.4 trillion on the back of higher domestic (+15% YoY) and external (+4% YoY) borrowings. Further disaggregation showed Akwa - Ibom, Cross River, Delta, Lagos, Osun, Rivers and FCT have the highest debt, accounting for almost 45% of total debt owed by states.



The Nigerian equities market extended its loss run this week, with the ASI shedding 0.19% to close at 29,560.47 points while market capitalization lost N21 billion. This performance was largely driven by bearish sentiments in the Breweries (-0.32%), Personal Care (-2.16%), Food (-0.21%) and Insurance (-0.39%) indices, offsetting the mild gains in Banking (+0.08%), Cement (+0.04%) and Oil and Gas (+0.70%) sector.


Dissecting the sectoral performance revealed marked sell-offs in (GUINNESS: -3.92%, CCNN: -5.88%, PZ: -9.69%, GSK: -1.58%, UACN: -4.76%, CADBURY: -3.8%, DANGFLOUR: -1.75%, DANGSUGA: -1.44%, and MANSARD: -5.00%).


Fixed Income

Average fixed income yields contracted this week by 23bps to 13.67% as interest resurfaced at both long and short ends of the curve. On the latter, average NTB yields fell by 43bps WoW to 13.11%, as the absence of OMO auction and inflow of mature OMO bills (N31.8 billion) supported improvement in system liquidity. Meanwhile, average bond yields inched lower by 3bps to 14.22% owing to demand for the JUN 2019 (-54 bps WoW) and MAR 2024 (-41 bps WoW) issuances.



Take-Away For The Week

Figure 1: States with the highest Foreign and Domestic debt as at FY 18 (N’ billion)


The chart below shows states in Nigeria with the highest domestic and external debt stock. These 10 states account for 54.87% of external debt stock and 51.06% of total debt stock.


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Source: NBS, ARM Research


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Research 234 (1) 2701653  research@armsecurities.com.ng



Nigeria: Economic Dashboard @ 120419

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