Weekly Economic and Financial Commentary – WE 17th May, 2019

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Saturday, May 18, 2019  / 07:16AM / By ARM Research 

 

Global Economy

This week, the trade tension between US and China was exacerbated this week after China announced that it will increase tariffs on $60 billion worth of American goods. This came in response to Trump’s earlier threat to increase tariffs on $200 billion of Chinese imports from 10% to 25%.  Elsewhere, Data released by Eurostat showed the trade surplus in the bloc narrowed to €22.5 billion in March, compared to €26.9 billion in same period last year. This mirrored the faster increase in imports (+6% YoY to €183.1 billion) than exports (+3% YoY to €205.6 billion). The narrowed surplus largely stemmed from lower surplus in Germany (-8% YoY to €56.3 billion) and increased deficit in the United Kingdom (+28% YoY to €52.9 billion). 

 

Domestic Economy 

This week, the National Bureau of Statistics (NBS) released inflation data for the month of April earlier than scheduled. In a twist from the downtrend observed from the start of the year, inflation for the month of April ticked up by 11.37% YoY, far from 11.25% YoY recorded in the prior month. Unsurprisingly, while core inflation maintained the downtrend printing at 9.28% YoY (March: 9.46%), food inflation on the other hand led the uptick, printing at 13.70% YoY (March: 13.45%). On the core index, the telling impact of curtailed PMS prices at N145/litre remains the pillar for the moderation, overshadowing increases in diesel (+12.9% YoY) and kerosene (+13.6% YoY) prices. The food index on the other end mirrors uptick in farm produce inflation which expanded by 47bps to 13.79% YoY.

 

Equities

After three consecutive weeks of losses, the market turned a corner this week with the NSE ASI appreciating 8bps WoW to close at 28,871.93 points. The renewed interest in Nigeria’s bourse was spurred by investors’ appetite for MTN Nigeria’s shares following the company’s listing on the Nigerian Bourse. For context, MTNN gained a whopping +20% this week in its first two days of trading session and following its lofty weight on the bourse (~17% of total market capitalization), the upbeat interest for the stock offset negative sentiment across major sectors (excluding the personal care sector which gained 1.1%). That said, distilling the market performance reveals selloff across bellwether stocks such as CCNN: -9.15%, ACCESS: -9.15%, UBA: -7.69%, NESTLE: -5.92%, GTBANK: -4.38%, ZENITH: -2.00% and DANGCEM: -1.68%.

 

Fixed Income

For the second week in a row average fixed income yields ended the week depressed (-46bps WoW to 13.1%) following buy pressure at both ends of the curve. Starting with the short end, average NTB yields dipped 85bps to 12.17%. This was in part fed by higher system liquidity from OMO maturity this week (N107.1 billion) and lower stop rates at this week’s NTB auction (-15bps to 11.75%). Average bond yields fell 7bps WoW to 14.03% with the short-dated maturities seeing the most demand – Jun 19 was down 46bps, Feb 20 down 54bps and Jul 21 down 44bps.  

 

Take-Away For The Week

Inflation trend

This week ,the Nigerian Bureau of Statistics released headline inflation for the month of April which showed a 12bps MoM spike to 11.37%. However, examining trend in State’s inflation we noticed widespread disparity in consumer prices. The charts below show States with the highest and lowest headline inflation.

 

Proshare Nigeria Pvt. Ltd.

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

 

Nigeria: Economic Dashboard @ 170519 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


 

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