August 10, 2019 / 01:53PM / By ARM Research
China’s July trade data was released this week, showing a surge in the trade surplus to $45.1 billion from $27.5 billion in similar period last year, and above market consensus of $40 billion. The growth stemmed from a 3% YoY increase in exports to $222 billion and decline in exports by 5.6% YoY to $177 billion. The positive data comes in the week President Trump announced a further 10% tariff on $300 billion worth of Chinese goods; to which the PBOC responded by setting the midpoint of the renminbi’s daily trading range above $7 for the first time in a decade. The brawl between the super powers caused wild selloffs across global markets and led to cut in benchmark interest rates by major central banks. Elsewhere, growth of the UK economy slowed in Q2 to 1.2% YoY (Q119: 1.8%), the slowest rate since Q212 following a 1.6% fall in business investment, as well as declines in manufacturing and production in the tune of 0.9% and 0.5%, respectively.
This week, data released by the NBS on Nigeria’s petroleum products importation for Q2 2019 revealed a 15% QoQ increase in both PMS imports to 5.61 billion litres (Q1 2019: 4.87 billion litres) and automotive gas oil (AGO or diesel) to 1.38 billion litres. Accordingly, nationwide distribution of truck-out volume showed a 6% QoQ increase in PMS, 1% QoQ increase in AGO and 28% QoQ increase in the distribution of Household kerosene. While PMS prices remained stable over the quarter, deregulated products such as kerosene and Diesel witnessed a 3.6% and 1% hike in prices respectively despite the increase in truck out distribution, thus reflecting a gap between demand and supply of both products. Elsewhere, with the deadline for submission of recapitalization plans fast approaching (August 20th, 2019), the director of policy and regulation stated that insurance companies are barred from borrowing funds to meet their recapitalization requirements. However, existing companies were given options to meet the requirement via cash payment for new shares issued and utilization of retained earnings.
The Nigerian bourse ended the week negative, declining -1.17% WoW (YTD: -13.12%) to close at 27,306.81 points with market capitalization shedding N157.7 billion. Further breakdown reveals sectoral losses across the index, save the Telecoms sector (+2.16% WoW) which closed in the positive territory. A delve into the sectoral performances revealed losses in FBNH (11.61%), ZENITH (-10.66%), GUINNESS (-10.00%), FO (-12.60%), UACN (-4.35%), muting gains in MTNN (+3.15%). Elsewhere, MTNN was added to the MSCI Nigeria index. MTNN will have a 12.9% weighting on the MSCI Nigeria Index and 0.8% on the MSCI Frontier Index. The addition to the index will require a reorganization of portfolios linked to the index and inclusion of MTNN in their coffers.
The apex bank resumed OMO auctions this week after a 3 weeks absence, with a total of N114.6 billion (vs N75bn at the last auction) sold across two tenors – 85-day and 344-day. Compared to the last auction, the 1yr stop rate was 25bps lower printing at 12%. In the secondary market, average yields rose 84bps WoW to 13.12% following upsurge in NTB (+129bps WoW to 12.42%) and bond yields (+40bps WoW to 13.83%). The higher NTB yields mirrored liquidity squeeze following CBN OMO sale this week along side selloff in the 91-day and 182-day paper which were up 220bps and 135bps respectively. The performance in the bond space was spurred by selloff in the Feb-2020 bond which increased 130bps WoW.
Take-Away For The Week
Trend In Chinese Yuan Vs China Trade Balance
This week, we feature trend in Chinese Yuan and China’s trade balance since the inception of the ongoing trade war. The chart reveals that China’s trade surplus coincides with periods where they experienced weakened currency and vice versa. This week, the People’s bank of China set the daily benchmark at a weaker level than 7-yuan-per-dollar, attributing the currency's current weakness to "unilateral and protectionist measures, as well as the expectation of additional tariffs on Chinese goods
Research 234 (1) 2701653 email@example.com
Nigeria: Economic Dashboard @090819
Do you wish to be included in the Events Calender?
Most Recent Weekly Commentaries