Weekly Economic and Financial Commentary - Week Ended Feb 07, 2020

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Saturday, February 08, 2020 / 02:30PM / By ARM Research /Header Image Credit: ARM

 

Global Economy

Trade figures for the US revealed its trade deficit rose by 11.89% MoM to $48.9 billion in December 2019. This was driven by a faster increase in imports (+2.7%) compared to the growth in exports (+0.8%). For FY 2019, the trade deficit was down by 1.7% YoY to $616.8 billion - an offshoot of a faster decline in imports (-0.4% YoY) relative to exports (-0.1% YoY) . Albeit, its goods deficit with China fell 17.6% to $345.6 billion, its smallest level since 2014. Elsewhere, China announced it would halve tariffs on hundreds of US good worth about $75billion be-ginning February 14. These tariffs were initially imposed on Sept.1 2019 and covered products such as US crude oil, LNG, pork and soybeans. These cuts signify China's efforts to imple-ment the recently signed phase 1 trade deal. On global politics, President Trump was acquitted by the Senate in his impeachment trial thus ending a bid to remove him from office.

 

Domestic Economy 

PMI data for the month of January 2020 was released by the CBN. Although it printed above the 50pts benchmark, the manufacturing and non-manufacturing PMI slowed by 1.6pts and 2.5pts to 59.2pts and 59.6pts respectively relative to the prior month. This was due to a moderation across all subsectors, signalling a slowdown in the level of business activities compared to the previous month. Elsewhere, the Ministry of Finance reported that the federal government has gotten an approval of $6 billion out of ~$30 billion loan which the FG intends to channel towards infrastructure projects. Shedding more light on the $30 billion loan program, about $17 billion would be sourced from the China-Exim bank while the balance would be funded from other lending institutions such as the Islamic Development Bank.

 

Equities

 

The Nigerian bourse witnessed a steep decline as the ASI closed -2.69% WoW, while market capitalization lost N239 billion to close at N14.62 trillion. All sectors closed in red, save the in-surance sector (+0.15%). The decline was anchored by the Breweries (-5.62%), Cement (-4.94%), Banking (-2.26%), Oil & Gas (-5.74%), and Telecom (-1.48%) sectors. On stock perfor-mance, FBNH (-8.40%), ZENITH (-5.04%), NB (-6.36%), INTBREW (-5.56%), DANGCEM (-5.50%), BUACEMENT (-4.32%) and MTNN (-2.17%) yielded negative returns amongst other stocks.

 

Fixed Income

Average bond yields witnessed its first WoW rise of the year, closing 15bps higher at 6.83%. This mirrored increases at both ends of the curve with NTB yields up 13bps to 3.86% and bond yields up 17bps to 9.79%. The biggest increases in bond yields were seen in the Feb-2020 (+185bps), Jul-2021 (+27bps) and Apr-2023 (+25bps). In the NTB space, the increases were ob-served across the short-tenor bills (35bps) and long-tenor bills (34bps). At the OMO auction this week, the CBN sold N128.2 billion worth of OMO bills, matching the total amount sub-scribed. However, this was less than the N150 billion offered and the N311.54 billion worth of bills maturing in the same day. The 1yr stop rate declined 4bps to 13.05%.

 

Take-Away For The Week

Monthly Foreign Currency flows through the IEW ($'billion)

 

This week, we feature the monthly foreign currency flows through the Investors and Exporters Window (IEW). Movement of FX flows at the IEW took a different turn over the first month of the year. To buttress, after six consecutive months of net outflow at the window, balance of flows printed at a net inflow of $561 million in January 2020.

  

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

 

Nigeria: Economic Dashboard @ 070220 

 

 


 

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

 

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