Saturday, August 11, 2018 11.26AM / ARM Research
This Week In Review
Turkey’s currency hit a record low of 6.07 against the U.S dollars having lost more than half of its value this year. Notably, the duo impact of patchy economic data together with heightened diplomatic tension between Turkey and U.S continued to weigh on the country’s exchange rate. Over in the U.S., headline inflation was unchanged at 2.9% YoY in July. However, the closely watched core-index surged to a 10-year high of 2.4% (June: 2.3%). On a MoM basis, headline CPI advanced 0.2% on the back of rise in food (+0.1% MoM) and energy (+0.2% MoM) prices.
Elsewhere, after a slowdown in Q1 18—on the back of weather-induced drag, U.K’s GDP bounced back, posting 0.4% QoQ growth in Q2 18 (Q1 18: 0.2% QoQ) as the impact of warmer weather and royal wedding largely supported the heavily weighted service sector. Elsewhere, Japan’s GDP returned to growth in Q2 18 as it ex-panded 0.5% QoQ (Q1 18: -0.2% QoQ) driven by higher private consumption (+0.7% QoQ vs. Q1 18: -0.2%) which contributes more than 60% of Japan’s GDP.
Total petroleum product import in Nigeria declined 9.8% QoQ (+3.3% YoY) to 6.1 billion litres in Q2 2018 reflecting steep decline in Premium Motor Spirit imports (-15% QoQ to 4.8 billion litres). We note that import printed lower despite petroleum product consumption staying almost unchanged (-1% QoQ to 6.4 billion litres) over the quarter. Precisely, total consumption in Q2 18 trumped the amount of petroleum products imported in the quarter by 257 million litres. We link this to sizable import (+34% QoQ to 6.8 billion litres) in the previous quarter which most likely fed into petroleum reserves and supported consumption over the period.
The Nigerian equity market advanced its losing streak for the second week in August as the NGSE index shed 289bps to close the week at 35,446.47pts. The weak performance was steered by sell pressures in Seplat (-8.45%), Flour Mills (-8.89%), Dangote Cement (-6.55%), Dangote Sugar (-3.13%), FBNH (-4.00%) and Guaranty (-2.62%). Clearly, none of the bellwether stocks closed in the green region as Nigerian Breweries, Nestle and UBA closed flat. Dissecting the performance on a sectorial basis, all the sectors closed negative save the Brewers, with Cement (-6.26%), Oil & Gas (-1.98%), Insurance (-1.64%), Banking (-1.51%), Food (-0.93%) and Personal Care (-0.53%) leading the decliners.
Tides turned in the Nigeria fixed income market this week as average fixed income yields rose 21bps WoW to 13.29%. This mirrored selloff at both ends of the curve. To buttress, amidst mild sell offs at the short end of the curve and CBN’s OMO sale (N377.1 billion), Treasury Bill yields edged higher (+20bps WoW to 12.51%). At the long end of the curve, investors sold off bonds (+23bps WoW to 14.07%) as market interpreted the shift in Bond auction date as FG’s desperation to ramp up borrowings at its next auction.
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