Nigeria Economy | |
Nigeria Economy | |
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Saturday,
July 27, 2019 / 08:00AM / By ARM Research
Global Economy
The
preliminary estimate for US GDP growth was released today showing expansion in
US economy albeit, at a slower rate at 2.1% YoY in Q2 19, from 3.1% in
Q119 – ahead of market consensus of 1.8%. Growth over the quarter stemmed
largely from the rise in PCE (+4.3%) and increase in government consumption
(+5%). However, this was pared by the steep declines in gross private domestic
investment (-5.5%) and exports (-5.2%), as well as the uptick in imports by
0.1%. The drag on economic growth mirrored impact of lingering US-China rifts
and the general slowdown in the global economy. Elsewhere, European Central
Bank (ECB) voted to leave financing operations, marginal lending facility and
deposit facility at 0%, 0.25% and -0.40% respectively earlier in the week.
However, the ECB stroke a dovish tone, citing that room for monetary easing
policy easing via rate cuts and Quantitative could be in the
offing.
Domestic Economy
At
the conclusion of the Monetary Policy Committee (MPC) meeting on Tuesday, the
monetary authority left all monetary parameters unchanged, highlighting the
need to observe the impact of previous policies aimed at boosting credit to the
private sector . The committee also expressed its desire to balance between
liquidity surfeit in the system and stimulating economic growth. Elsewhere, the
Nigerian National Petroleum Corporation (NNPC) released its financials for the
month of May 2019, which showed a 13.05% MoM increase in operating profit to
N6.3 billion. Parsing through the numbers, the growth in operating profit
reflects marked improvement in the downstream segment which posted a profit of
N4.8 billion (compared to a loss in April: N1.68 billion) as well as a
moderate improvement (+11% MoM to N8.2 billion) in its Gas segment operations
(Nigerian Gas Company and Nigerian Gas Marketing Company). On other fronts,
hinged on prospects for improved FG revenues from higher crude oil prices, IMF
revised Nigeria’s growth forecast for 2019 upward by 2bps to 2.3% from its
prior projections in April.
Equities
This
week, Nigerian bourse closed flat from the previous week, with the NSE ASI
closing at 27,918.59 pts. Losses observed in the Banking (-0.49%), Brewers
(-0.20%), Telecom (-0.52%), and Insurance Sectors (-0.83%) were muted by gains
in the Cement (+0.25%), Personal Care (+0.28%), Food (+2.27%) and Oil & Gas
Sectors (+0.84%). Dissecting the sectoral performances revealed losses in
GUARANTY (-1.04%), ETI (-6.11%), INTBREW (-18.30%), MTNN (-0.78%) and AIICO
(-6.25%), while WAPCO (+1.12%), PZ (+3.45%), NESTLE (+4.00%), UACN (+8.33%),
and SEPLAT (+2.08%) led the gains
Fixed Income
Over
the week, average fixed income yields rose 22bps WoW to 12.45% spurred by elevation
at the short end of the curve. At the short end, following selloff across
varying short dated instrument, average NTB yields rose 62bps WoW to 11.47%.
Contrarily, at the long end of the curve, amidst massive demand at this week’s
FGN bond auction (2x oversubscribed) average PMA stop rates dipped 800
bps MoM to 13.7%. This paved way for buy sentiments to prevail in the secondary
market with secondary market bond yields closing the week 18bps lower to
13.43%.
Take-Away For The Week
Trend
in Nigeria’s Under Recovery
This week, we feature
trend in Nigeria's under recovery (PMS subsidy) over the last one year.
Research 234 (1) 2701653 research@armsecurities.com.ng
Nigeria: Economic Dashboard @ 260719
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