Weekly Economic and Financial Commentary - Week Ended Nov 08, 2019


Saturday, November 09, 2019 / 05:00PM / By ARM Research 


Global Economy

The US reported a decline in trade deficit to $52.5 billion in September, down $2.6 billion from $55 billion in August and in line with consensus expectation. The outturn mirrors faster decline in imports, which dropped by $4.4 billion to $258.4 billion, relative to exports (- $1.8 billion to $206 billion). Notably, US' deficit with China, Mexico, EU and Japan narrowed, while its deficit with Canada widened. China also released trade balance for October which showed an increase in trade surplus by $3.16 billion to $42.81 billion. This was spurred by a faster decline in im-ports than in exports. Exports were down $5.2 billion MoM (-2.4%) to $212.93 billion while imports fell by $8.4 billion MoM (-4.9%) to $170.1 billion. According to China's figures the October trade balance with the US swung by $0.54 billion, in China's favour, to give them a trade surplus of $26.42 billion. Meanwhile, optimism regarding trade talks went up a notch after Chinese officials stated progress was been made on negotiation which could see to a rollback of some previous tariffs placed by both parties.


Domestic Economy 

This week, President Buhari delivered a memo which approved the extension of border closure with adjoined countries till 31st of January 2020. Against this backdrop, new conditions for reo-pening of the border were given by the minister of Foreign Affairs. In a bid to prevent dumping and ensure safeguard measures, the rule of origin for imports - a criteria needed to determine the national source of a product - must be adhered to. Hence, goods produced in ECOWAS member states must be in majority, while goods produced outside the region should have an added value above 30% by an ECOWAS country. Furthermore, repackaging of goods will not be condoned. It is worth mentioning that reopening of the border is largely hinged on agreements from the tripartite meeting between Niger, Benin Republic and Nigeria.



The Nigerian bourse ended the week in green as gains particularly on Monday (+41bps) and Friday (+48bps) trading muted losses observed every other day of the week. Consequently, the ASI as well as Market Cap increased by 8bps WoW to 26,314.49 pts and N10.3 billion respectively. Banking sector (+8.07%) anchored the gains while other sectors closed negative, with bulk of the decline seen in Personal Care (-20.45%) WoW. On stock performances, ACCESS (+17.95%), FCMB (+16.25%), UBA (+13.79%), GUARANTY (+13.49%), CCNN (+10.06%) recorded gains muting declines in UNILEVER (-26.59%), INTBREW (-25.4%) and DANGCEM (-2.47%) WoW amongst others.


Fixed Income

Earlier today, the apex bank announced plans to increase participation in OMO secondary market in a bid to improve liquidity of the OMO bills. This will be done by providing one-way quotes for bills across all tenors. The announcement came a day after OMO auction on Thursday, wherein N300 billion worth of OMO bills was offered but was under-subscribed by N67.5 billion. Thus, only N232.5 billion was sold as against maturing bills of N365 billion, while the 1yr stop rate declined 2bps to 13.3%. In the secondary market, average yields recovered from last week's 58bps decline to close this week 19bps higher at 12.98%. This was driven by contrasting performances at both ends of the curve - bonds declined by 28bps WoW to 12.89% while NTBs rose 66bps WoW to 13.08%.



Take-Away For The Week


Foreign Currency flows through the IEW ($'bn) 

This week, we feature foreign currency flows through the Investors and Exporters Window (IEW). Despite outflows softening over the month of October, inflows declined at a faster pace mirroring decline in offshore flows. Consequently, the IEW saw a net outflow over the month.

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Nigeria: Economic Dashboard @ 081119  

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