Domestic Macroeconomy
This week, we focus on the March CPI data published by the NBS and IMF’s revised economic outlook for 2024. In March, the headline inflation rose sharper-than-anticipated to 33.2% – relative to 31.7% in February and our projection of 32.2%. The latest data marks 17 straight months of uptick in inflation and the highest print since March 1996 (41.9% y/y). On a m/m basis, the overall inflation slightly eased 10bps to 3.0% but stayed above 12-month average of 2.4%. We attribute the moderate step-down in monthly price pressure to better farm (down 42bps to 3.4%) and processed food (down 10bps to 3.7%) inflation rates.
Global Equities Market: Performance Wane Amid Geopolitical Tension Escalation
This week, the age-long proxy war between Israel and Iran escalated after retaliation attacks from both countries. This has spooked concerns around a wider Middle Eastern war and worsening global geopolitical tension. While a full-blown war is unlikely, investors’ concern has heightened. Away from global tension, mixed inflation data, expectations around a possible no cut or longer-than-expected rate cut, and post Q1 corporate earning corrections dampened investor sentiment.
Domestic Equities Market: Bears Maintain Tight Grip on the Bourse… ASI down 2.7% w/w
This week, unabating sell pressure on the banking tickers pinned the bourse to its fifth consecutive weekly loss as the NGX-ASI fell 2.7% w/w to 99,539.75 points. Likewise, market capitalisation declined 2.7% to ₦56.3tn while YTD return cut back to 33.1% (previously 36.8%). Meanwhile, average volume and value traded fell 43.6% and 54.9% to 257.9m units and ₦6.5bn, respectively. The top traded stocks by volume were ACCESSCORP (176.5m units), UBA (171.3m units) and ZENITH (124.7m units).
Foreign Exchange Market: FX Reserves Dip as CBN Settles Obligations
The price of benchmark Brent Crude faltered by 3.1% this week, to close at $87.6/bbl. This happened after prices briefly rallied to just over $90.0/bbl. at the beginning of the week, due to crisis in the Middle East. On the domestic scene, CBN’s foreign reserves lost 1.5% w/w to $32.1bn (as of 18/04/2024). The reserve balance, the lowest since Sept. 2017, indicates settlement of obligations as highlighted by CBN Gov. Cardoso during the week.
Money Market: Bearish Outing in the Secondary Market
This week, system liquidity closed at ₦1.1tn, 4.4x higher than the previous week. The upsurge, despite primary market sales worth ₦626.8n relative to inflows of ₦191.5bn, was supported by banks tapping into the SLF to the tune of ₦1.0tn. As such, OPR rate declined 0.3ppts to 29.4% w/w although OVN rate rose 0.2ppts to print at 30.3% w/w.
Bonds Market: Mixed Sentiments in Bonds Space
This week, the Debt Management Office (DMO) reopened the FGN FEB 2031 and 2034 bond papers, alongside fresh FGN APR 2029 bond. A total of ₦450.0bn was offered, while demand was 1.8x across all papers with notable preference for the FEB 2034 (3.6x). At the end of the auction, the CBN allotted ₦79.9bn, ₦85.1bn, and ₦461.9bn on the FEB 2029, 2031, and 2034 bonds, improving bid-to-cover rate to 1.5x (previously 1.3x). Accordingly, the average stop rate across board fell by 45bps to 19.68%.
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