Weekly Economic and Financial Commentary – WE 14th Dec, 2018


Saturday, December 15, 2018     08.58AM / By ARM Research 


Global Economy

Data released during the week revealed that inflation rate in the US fell to 2.2% in November (from 2.5% in the previous month) following faster contraction in energy prices (-2.2% m/m). Excluding volatile food and energy prices, the core inflation edged up 2.2%, as against 2.1% in the previous month. Further supporting the moderation in the headline index, was the import and export prices for November, which showed that import prices declined 1.6% MoM (+0.5% MoM in October) and exports prices fell 0.9% MoM (+0.5% MoM in October). 

Elsewhere, November retail sales and industrial output data for China came in slower in November at respective rates of 8.1% YoY and 5.4% YoY from respective levels of 8.6% YoY and 5.9% YoY in October.


Domestic Economy

Data released earlier today showed that Nigeria’s headline inflation for the month of November increased by 11.28%, 2bps higher than 11.26% reported in October. The pressure during the month stemmed from the food index, which rose 2bps to 13.3% YoY, to more than overshadow the moderation in the core index (-10bps to 9.79% YoY). 

Elsewhere, third quarter GDP released during the week revealed that the Nigerian economy expanded by 1.8% YoY, higher than Q2 growth of 1.5% YoY. The growth recorded was driven by improvement in the non-oil sector (+2.3%) as the oil sector posted its second consecutive contraction in 2018 by 1.3% YoY.



Activities in the Nigeria equities market remained bearish during the week, with the NSE ASI declining by 0.60% WoW to 30,681.50 points and market capitalization shedding about N61.8 billion over the week. 

The loss was driven by declines in bellwether stocks in the banking (FBNH: -1.97%, STANBIC: -2.34% and ZENITH: -2.34%), Breweries (NB: -0.63%) and Food (NESTLE: -6.39%) sectors. Top decliners during the week were MOBIL (-10.41%), CONOIL (-10.00%) and CUTIZ (-9.64%).


Fixed Income

Proceedings turned bullish in the fixed income market during the week, as average yields contracted 19bps to 15.42% following declines at both ends of the curve (NTB: -32 bps to 15.36% and Bonds: 5 bps to 15.49%). 

The yields contraction stemmed from the inflow of matured OMO and NTB bills worth N551.36 billion and N52.65 billion respectively. 

The apex bank in its usual practice of curbing excess liquidity in the system sold a total of N206.43 billion via OMO auctions, including stabilization securities (N39.52 billion) today.


Take-Away for the week


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