Nigeria Economy | |
Nigeria Economy | |
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Saturday, October 06, 2018
15.45PM / ARM Research
Global Economy
US
trade deficit widened by 6.4% to $53.2 billion in August, the highest in 6
months, as exports of goods and services dropped by $1.7 billion MoM to $209.4
while imports rose by $1.5 billion MoM to $262.7 billion. On job creation, US
unemployment rate fell to a 50-year low of 3.7% in September (August: 3.9%)
while wage growth rose at a steady pace of 2.8% (August: 2.9%), suggesting
moderate inflation pressures.
Elsewhere,
against market expectation, the Reserve Bank of India (RBI) kept its interest
rates unchanged (repo and reverse repo at 6.5% and 6.25% respectively) as the
recent slowdown in inflation overshadows the strong economic growth, forcing
the committee sought to wait for better clarity on the rising growth-inflation
scenario in the economy.
In
another front, global crude oil price rallied to almost a 4-year high crossing
$85/bbl. largely due to geopolitical concerns. Importantly, there was
heightened fear of a supply crunch as timeline (November 4) for US sanctions
due to hit Iran drew closer To add, production shortfalls in Venezuela further
supported the rally in crude oil price pressures.
Domestic Economy
Recent
data by the CBN showed economic activities in the country continued to expand
in September, but at a slower pace relative to the previous month. The
Manufacturing Purchasing Manager’s Index (PMI) grew to 56.2 pts in September
(August: 57.1 pts) reflecting slower growth in new orders and raw materials.
Similarly, non-manufacturing PMI expanded to 56.5 pts, albeit at a slower pace
relative to 58.0 pts in August.
The
slow growth mirrored slow pace of expansion in business activities, level of
new orders, level of unemployment and Inventories. Further, business
expectation survey report for the month of September signals respondent firms
are more optimistic on the economy compared to the preceding month with general
expectation of currency appreciation, declining inflation rate and uptick in
borrowing rates for both September and October.
Equities
The
Nigerian equity market declined by 1.17% WoW to close at 32,383.15 index
points. The bearish sentiment was largely driven by persisting sell pressure in
bellwether stocks – DANGCEM (-2.44%), STANBIC (-7.6%), UBA (-2.38%), NB
(-1.97%), and ETI (-2.23%). Analysis of the market performance on a sectorial
basis showed that Cement (-2.21%), Brewers (-1.55), Banking (-1.44%), Real
Estate (-0.53%) and Insurance (-0.47%) closed the week negative while the Oil
& Gas (+2.23%), Food (+0.5%), and Personal Care (+0.03%) sectors closed
positive over the week.
Fixed Income
Yields in the Nigerian Fixed Income market moderated over the week as average yields dipped 24bps WoW to 14.21% following downward trend at both ends of the curve. The performance was largely driven by strong buy pressure following the relatively buoyant liquidity in the system with ₦173 billion of OMO maturing over the week. For emphasis, at this week T-Bill auction, average bid to cover climbed to 3.3x, the highest so far this year. Consequently, average T-Bill yield saw a drop of 31bps WoW to 13.63%. Similarly, following buy sentiment, average bond yields also dipped 17bps WoW to 14.79%.
Notes: Tax
revenue continues to fall short of budgeted revenue
Source: FIRS, ARM Research / *9M 2018
Research 234 (1) 2701653 research@armsecurities.com.ng
Footnotes
1. Weekly Economic and Financial
Commentary – WE 21st Sept, 2018
2. Weekly Economic and Financial
Commentary – WE 07th Sept, 2018
3. Weekly Economic and Financial
Commentary – WE 31st August, 2018
4. Weekly Economic and Financial
Commentary – WE 24th August, 2018
5. Weekly Economic and Financial
Commentary – WE 17th August, 2018
6. Weekly Economic and Financial
Commentary – WE 10th August, 2018
7. Weekly Economic and Financial
Commentary – WE 03rd August, 2018
8. Weekly Economic and Financial
Commentary – WE 13th July 2018
9. Weekly Economic and Financial
Commentary – WE 14th June 2018
10. Weekly Economic and Financial
Commentary – WE 20th July, 2018
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