Nigeria Economy | |
Nigeria Economy | |
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Sunday, December 02, 2018 02:50 AM / By ARM Research
Global Economy
The United States, Canada and Mexico signed a new trade deal on Friday replacing the North American trade pact (NAFTA) after over a year of negotiations. The new deal offers a glimmer of certainty amid rising global tensions over trade even as Trump and Chinese President Xi Jinping are set to meet on Saturday. On another note, Personal income in the US for the month of October increased by $84.9 billion (0.5% MoM) in October, while disposable personal income increased $81.7 billion (0.5% MoM) and personal consumption expenditures (PCE) increased $86.9 billion (0.6% MoM).
Domestic Economy
Following the increasing FX demand ahead of the
festive period and panic buying due to recent slump in crude oil prices, which
have seen the Naira weakened against the US at the parallel market in recent
weeks (1.4% WoW and 1.8% MtD), the apex bank during the week reiterated its
ability to comfortably supply FX across markets. Notably, the apex bank
released a circular yesterday, stating its intention to increase intervention
sales to BDCs to four times a week (previously Monday, Wednesday and Friday),
with an additional $15,000 sales per BDC on Thursdays. As a result, weekly CBN
intervention sales to BDCs per week will now increase to $60,000 per week from
previous $45,000 in order to meet the increased demand for Personal/Business
and Travel allowance. Elsewhere, the FG, States and local governments shared a
total of N788.1 billion for the month of October, N89 billion
higher than the previous month.
Equities
The Nigeria equity market booked another week of loss,
with the NSE ASI declining by 2.54% WoW to 30,874.17 pts and the market
capitalization shedding N293.7 billion over the week. The loss was
driven by declines in bellwether stocks in the banking (FBNH: -6.58%, GUARANTY:
-5.63%, STANBIC: -2.04%, UBA: -3.85% and ZENITH: -3.33%), cement (DANGCEM:
-4.15%, LAFARGE: -7.14%) and Oil & gas (SEPLAT: -9.68%) sectors. Top
decliners during the week were DIAMONDBNK (-31.58%), PRESTIGE (-30.38%) and
UNITYBNK (-18.82%).
Fixed Income
Average yields in the fixed income market dipped for
the second consecutive week by 5bps WoW to 14.87%. The plunge in the
Naira yield curve was driven by buying sentiment at the short end of the curve
prior to CBN’s OMO sale (N371.6 billion) on Thursday at higher rates
(Average OMO rates: +20bps WoW to 13.2%). Elsewhere, activities at the long end
of the curve were largely quiet on most trading days leaving bond yields
relatively flattish, however, following higher stop rates at yesterday’s OMO auction
bond yields rose 1bps WoW to 15.36%.
Take-Away
Research 234 (1) 2701653 research@armsecurities.com.ng
Footnotes
1. Weekly Economic and Financial Commentary - WE 16th Nov, 2018
2. Weekly Economic and Financial Commentary – WE 09th Nov, 2018
3. Weekly Economic and Financial Commentary – WE 02nd Nov, 2018
4. Weekly Economic and Financial Commentary – WE 26th Oct, 2018
5. Weekly Economic and Financial Commentary – WE 05th Oct, 2018
6. Weekly Economic and Financial Commentary – WE 21st Sept, 2018
7. Weekly Economic and Financial Commentary – WE 07th Sept, 2018
8. Weekly Economic and Financial Commentary – WE 31st August, 2018
9. Weekly Economic and Financial Commentary – WE 24th August, 2018
10. Weekly Economic and Financial Commentary – WE 17th August, 2018
11. Weekly Economic and Financial Commentary – WE 10th August, 2018
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