Weekly Economic and Financial Commentary – WE 22nd March, 2019

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Saturday, March 23, 2019     12.00AM / By ARM Research 

 

Global Economy

The US Federal Reserves held its monetary policy meeting during the week and left fund target range unchanged at 2.25% - 2.5%, with a downgrade of its assessment of the economy from a prior outlook of solid growth picture to slow pace of growth. To reflect its view, the Fed revised its 2019 growth forecast to 2.1% from 2.3% , as well as its inflation rate estimate to 1.8% in 2019 (previously 1.9%). Consequently, the median forecast for the funds rate is now a hold for the rest of 2019 and 25bps in 2020 (with 7 out of the 17 members expecting a hold in 2020).

 

Elsewhere in Europe, the Bank of England (BOE) policy makers voted unanimously to hold its key interest rate at 0.75%. This came in despite heightening inflation-ary pressures (+10bps MoM to 1.90% YoY), as concerns over slowing economic growth amid uncertainties regarding Brexit dominated monetary policy deliberations.

 

Domestic Economy

The Senate during the week joined the House of Representatives, to approve the National Minimum Wage Bill which will see minimum wage earned by workers increase by 66.67% to N30,000 from N18,000. In addition, the Senate also requested that a supplementary bill be prepared to cover the cost of the increase in personnel cost which was not captured in the proposed budget submitted by the President.

 

Elsewhere, the Nigerian National Petroleum Corporation (NNPC) released its financial performance for the year ended December 2018 which showed an operating profit of N81.6 billion compared to a loss of N82 billion same period in 2017. The improvement originated from surplus in its upstream operations (+57.3%) which reflects higher crude oil prices and production over the period as well as lower losses on its downstream operations – reported a loss of N9.6 billion in 2018 compared to N99.9 billion loss in 2017.

 

Equities

The Nigerian bourse closed relatively flat this week with the ASI shedding -0.01% WoW to close at 31,139.35 points while market capitalization lost N1.2billion to end the week at N11.6 trillion.

 

This was induced by bearish sentiments in the Breweries (-4.84%), Cement (-0.06%), Personal Care (-1.78%), Food (-2.02%) and Oil & Gas (-9.03%) indices which capped gains in Banking (+2.41%) and Insurance (+0.43%) indices. Exploring the sectoral performance revealed mixed performance across bellwether stocks (NB: -7.33%, DANGCEM: -0.16%, NESTLE: -2.91%, SEPLAT: -7.86%, ACCESS: +18.120% and GUARANTY: +5.93%).

 

Fixed Income

Average yields in the fixed income market expanded marginally by 7bps Wow to 13.85% driven by expansion at the short end and long ends of the curve. For the former, despite lower stop rates at this week’s OMO auction which saw the reintroduction of the one-year OMO at 13.04% (vs. 15% at the last issue), average NTB yields expanded 10bps WoW to 13.46% following liquidity squeeze by the CBN with OMO sale of N409.7 billion. Similarly, following sell-off across varying long dated instruments, bond yields expanded 3bps WoW to 14.23%.

 

 

Take-Away For The Week

 

Figure 1: Recent Earnings Release

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Source: NSE, ARM Research

 

·         Corporate Earnings For The Week Ending 220319 – JBERGER Declares N6.10bn PAT in 2018 Audited Results

·         MOBIL Declares N9.33bln PAT in 2018 Audited Result, Proposes N8.25K Final Dividend

·         NASCON Declares N4.42 billion PAT in 2018 Audited Result, Proposes N1.00K Final Dividend


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Nigeria: Economic Dashboard @ 220319

 

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Capital Market, The Economy & Monetary Policy This Week

1.       SEC Nigeria To Review Capital Market Masterplan in 2019

2.      Domestic and Foreign Portfolio Participation in Equity Trading - February 2019

3.      Nigerian Capital Market MasterPlan:13 Out of 99 Initiatives Have Been Implemented- Mary Uduk

4.      Domestic and Foreign Portfolio Participation in Equity Trading - January 2019

5.      SEC’s 2019 Budget Seminar Explores Risks and Opportunities In The Nigerian Capital Market

6.      Why The FG Needs to Drive Pro-Market Policies - Prof. Uche Uwaleke

7.      The Class War Between The Poor and The Very Poor – LBS Executive Breakfast Session – Mar 2019

8.     How To Make Housing Unaffordable: Pass A National Housing Fund Act Without Amending The Land Use Act

9.      Fragile Balance of Payment Position: Policy Options - FSDH

10.  Commentary On The Service Charge For Payers Under TSA e-Collection Scheme

11.   All Region Terms of Trade Fell -2.78% Due to a Fall in the Prices of Goods Traded in Africa - NBS

12.  Headline Inflation Down To 11.31% in February 2019 - FDC

13.  Headline Inflation Increases By 11.31% YoY in February 2019; 0.06% Lower Than January 2019 Rate

14.  Nigeria’s Post-election Economic Reality: Investment As The Multiplier

15.   How The Buhari Administration Should Approach MSME Development - Muda Yusuf

16.  PMB's Second Term and Buharinsurance

17.   Buhari Second Term: Expectations for The Manufacturing Sector

18.  MPC Meeting: Temporary Price Stability; Justification for a Cut in Rates?

19.  Policy Trilemma and Interest Rate Behaviour in Nigeria

20. NPL and Its Effects on Banking Stability: Evidence From National and INTL Licensed Banks in Nigeria

21.  Ending Reliance On LIBOR: Progress Made On Transition To Overnight Risk-Free Rates And What Next

22. Personal Statements By The MPC Members At The 122 MPC Meeting Of Jan 21-22, 2019

 

 

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Related News

1.       Corporate Earnings For The Week Ending 220319 – JBERGER Declares N6.10bn PAT in 2018 Audited Results

2.      Investors Lose N1.25bn WoW As NSEASI Dips Marginally By -0.01% To Close The Week Negative

3.      Investors Lose N57.99bn as NSEASI Closes Below 31,000bpts

4.      Market Sentiment Remains Negative as NSEASI Dips By -0.13%

5.      Weak German Data, UST Curve Inversion Weigh on EM Risk Assets

6.      I and E Turnover Rebounds to c.$700m as CBN Re-Issues Long Tenor OMO Bill

7.      Invest in FGN Monthly Bond Auction – March 2019

8.     Gross Official Reserves Decreased by US$860m in February 2019 to US$42.31bn

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10.  Import Substitution - CBN Bans FX Sale To Textile Importers

11.   NASD OTC Market CAP Decreased By 2.25% To Close At N539.23bn

12.  NASD Plc CEO Appointed As President of Nigerian Advisory Council CISI UK

13.  Diversion of Brazilian Cane Mills to Ethanol Production to Boost Sugar Prices

14.  AFEX Shares Insights on How Women in Agriculture Balance for Better Even On the Farm

15.   Nigeria Produces 0.11% of Global Steel; Imports 5m Tonnes Annually

16.  Sugar Production in Nigeria: A Revenue Opportunity Despite A Growing Health Consciousness

17.   Cocoa Prices Up By 0.82% Despite Forecasts of Robust Global Cocoa Production

18.  Budget 2019: The Hidden Monsters

19.  Proposed Budget 2019 Analysis - FG Proposes To Spend N8.83trn in 2019

20. Brexit – The European Council (Art. 50) Conclusions, 21 March 2019

21.  Bank Rate Maintained at 0.75% - March 2019 – Bank of England

22. Federal Reserve Issues FOMC Statement – Mar 2019

 

 

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