Weekly Economic and Financial Commentary – WE 07th Sept, 2018

Proshare

Sunday, September 09, 2018   10.02AM  / ARM Research

 

Global Economy

Trade deficit in the United State widened by 9.6% MoM to print at $50.1 billion in July reflecting a pullback in the value of export (-1% MoM to $211.1 billion) amidst a 0.9% MoM increase in import to $261.2 billion. The higher import bill largely stemmed from higher crude oil prices and higher automobile and parts imports. Over in the EU, Q2 18 GDP was revised higher by 10bps to 0.4% YoY (same as Q1 18). The flat growth relative to Q1 18 was driven by slower growth in net-imports which outweighed investment spending.

 

Elsewhere in UK, Manufacturing PMI dropped to 52.8pts in August from 53.8pts in July, its lowest value in 22 months, reflecting a slowdown in output and new orders. While in Japan, Manufacturing PMI improved slightly to 52.5pts in August from 52.3pts following faster expansion in new orders.

 

Domestic Economy

Trade numbers from the National Bureau of Statistics (NBS) revealed Nigeria’s total foreign trade slowed over Q2 2018 (-9% QoQ to N6.6 trillion), however trade surplus remained bouyant over the quarter expanding 8% QoQ to N2.4 trillion. Despite exports declining 5% QoQ, the higher trade surplus reflected a faster decline in total imports (-16% QoQ) largely due to lower oil imports (-50% QoQ to N427 billion). For exports, major driver for the decline was lower exports of manufactured goods which declined 84% QoQ to N69.9 billion. For us, the decline is more of a normalization to trend level, as last quarter’s manufactured good export was abnormally high. Elsewhere, we observed exports to the US fell to a 14-quarter low of N63.6 billion (-75.6% QoQ, -79.9% YoY) on the back of lower oil exports.

 

Equities

The Nigerian equities market declined further by 2.33% WoW to close at 34,037pts. The negative performance stemmed from persisting sell-pressure in bellwether stocks – SEPLAT (-7.23%), NB (-5.11%), ACCESS (-4.74%), GUARANTY (-2.78%), UBA (-1.25%) and ZENITHBANK (-0.48%). Analysis of the performance on a sectorial basis shows that Personal Care (-6.29%), Brewers (-4.82%), Banking (-2.24%), Cement (-2.16%) and Food (-0.43%) closed the week negative while the Insurance (+0.79%) and Oil & Gas (+0.07%) sectors closed positive.

 

Fixed Income

Average yields surged further in the fixed income market (+28bps WoW to 14.12%), with sizeable elevation at both ends of the curve. At the short end of the curve, following the 35bps hike in OMO rates to 12.5%, treasury bill yields edged higher by 30bps WoW to 13.15%. Similar traits trailed the long end of the curve as bond yields rose 25bps WoW to 15.09%.

 

 Proshare Nigeria Pvt. Ltd.

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

 

 

Footnotes

1.          Weekly Economic and Financial Commentary – WE 31st August, 2018

2.         Weekly Economic and Financial Commentary – WE 24th August, 2018

3.         Weekly Economic and Financial Commentary – WE 17th August, 2018

4.         Weekly Economic and Financial Commentary – WE 10th August, 2018

5.         Weekly Economic and Financial Commentary – WE 03rd August, 2018

6.         Weekly Economic and Financial Commentary – WE 13th July 2018

7.         Weekly Economic and Financial Commentary – WE 14th June 2018

8.        Weekly Economic and Financial Commentary – WE 20th July, 2018 

 

 

Proshare Nigeria Pvt. Ltd.

 

 

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