| GDP (%) | INFLATION RATE (%) | MPR (%) | BOT (N’m) | CURRENCY (NAFEM) | BRENT CRUDE ($) | DEBT (N’tri) | UNEMPLOYMENT | MARKET CAP (N’tri) | ||
| Current | 3.19% | 33.40% | 26.75% | (₦6,524.17) | ₦1,598.56 | $84.28 | 36.32 | 121.67 | 5.00% | 55.48 |
| Previous | 2.98% | 34.19% | (₦1,414.30) | ₦1,570.14 | $82.64 | 36.44 | 97.34 | 4.20% | 55.129 |
GLOBAL ECONOMY
In July 2024, the US core Personal Consumption Expenditures (PCE) price index, which the Federal Reserve uses to gauge underlying inflation, increased by 0.20% from the previous month, matching market expectations and mirroring the 0.20% rise in June. Year-over-year, core PCE prices climbed by 2.60%, slightly below the anticipated 2.70%. This trend supports the case for the Federal Reserve to begin cutting interest rates.
This week, UK Prime Minister Keir Starmer announced significant tax increases targeting wealthier households and businesses to address a £22billion shortfall in public finances. The measures, revealed on August 28, 2024, include applying VAT to private school fees starting January 2025, reducing the Stamp Duty exemption threshold for first-time buyers to £300,000 in April 2025, and tightening eligibility for the winter fuel allowance. These steps are part of the government’s strategy to stabilize the economy and distribute the financial burden more equitably.
On Friday, the Euro traded at €1/$1.108, close to a two-week low, as recent inflation data increased expectations for a European Central Bank rate cut on September 12, which policymakers have indicated is likely. In August, Euro Area inflation fell to 2.20%, its lowest since July 2021, from 2.60% in the month of July and core inflation dropped to 2.80%, the lowest in four months.
China’s 10-year government bond yield rose above 2.17% as traders await August PMI figures for economic insights. Industrial firms saw a 3.60% year-on-year profit growth, totaling ¥4.10 billion in the first seven months of 2024, amid Beijing’s efforts to support a fragile recovery. The central bank also injected ¥300 billion through a one-year Medium-Term Lending Facility (MLF) at a 2.30% interest rate, following a 20bps rate cut in July.
We await the release of the US data on Initial Jobless Claims for the week and Unemployment rate.
GLOBAL MARKETS
Major Indices closed the day on a positive note, as investors assessed key inflation data closely watched by the Federal Reserve. The S&P 500 and Dow Jones indices closed positive, rising by 0.25% and 0.94% to 5,648.40 and 41,563.08 while the Nasdaq closed slightly lower by -0.75% to 19,569.99.
The London’s Financial Times Stock Exchange (FTSE) 100, Germany’s Deutscher Aktien (DAX) and Cotation Assistée en Continu (CAC) 40 in Paris all closed higher by 0.59%, 3.19% and 0.71% to 8,376.63, 18,906.91 and 7,630.95, respectively.
The Hang Seng and Topix Indices rose by 2.14% and 1.04% to 17,989.07 and 2,712.63, respectively.
We expect the market to trade with bullish sentiments, as strong earnings from blue chip stocks boost investor confidence.
DOMESTIC ECONOMY
Nigeria’s economy grew by 3.19% year-on-year in Q2 2024, increasing from 2.98% in the previous quarter. The oil sector expanded by 10.15% in Q2, much faster than 5.70% in the previous period, driven by increased oil output. Average daily crude oil production reached 1.41 million barrels per day (bpd) in Q2, slightly down from 1.57 million bpd in Q1 2024 but higher than 1.22 million bpd in the same period last year. Additionally, the non-oil sector maintained solid growth at 2.80%, consistent with the pace in Q1, primarily driven by robust performance in the services sector, which expanded by 3.79% and accounted for 58.76% of GDP.
The Chief of Staff to President Bola Tinubu, Mr. Femi Gbajabiamila, gave assurances during a fact-finding visit to the office of the Nigerian Financial Intelligence Unit (NFIU) in Abuja on Tuesday that the federal government has said it would take all necessary steps to remove Nigeria from the grey list of the global Financial Action Task Force (FATF), before the May 2025 deadline. The grey list, also known as the “Jurisdictions under Increased Monitoring” list, is a list of countries that the FATF deems to have a higher risk of money laundering and terrorism financing.
The money supply (M3), a comprehensive measure of the total money in an economy, increased to a record high of ₦106.27trillion in July 2024, despite the Central Bank of Nigeria’s (CBN) tightening measures. According to CBN data, M3 reached this record high, marking a 62.66% increase from ₦65.33trillion in July 2023. On a month-on-month basis, M3 rose by 4.74% from ₦101.46trillion in June 2024.
We await more information from the Federal Government on the Africa Energy Bank (AEB) to be set up with headquarters in Abuja in the month of September.
DOMESTIC MARKETS
Ecobank is seeking investor consent to temporarily suspend the 10% Capital Adequacy Ratio (CAR) requirement for its ECOTRA26 bond until September 30, 2025, due to the impact of new CBN regulations and the devaluation of the Naira. The bank’s CAR fell below the required level as a significant portion of its risk-weighted assets are denominated in US dollars, while its equity is in Naira.
To address this, Ecobank plans to inject $10million to meet the national bank minimum capital requirement, issue a $200million AT-1 bond, redeem a $200million promissory note, and convert $200million in dollar-denominated loans to Naira. Investors are offered a consent fee of $1.25 per 1,000 units for early consent by September 6, and $0.50 for late consent by September 11.
MONEY MARKET AND FIXED INCOME
System liquidity maintained a positive for the week despite two consecutive OMO auctions. System liquidity decreased by ₦600.12billion to close at ₦624.28billion. Consequently, the Open Repo Rate (O/R) and Overnight Rate (O/N) decreased by 767bps and 611bps to 18.11% and 20.06%, respectively. The Nigerian Treasury Bills (NT-Bills) market average yield decreased by -330bps to 22.16% against 25.46% the previous week.
In the Bonds market, the average benchmark yield for the Short-tenor, Medium-tenor and Long-tenor Bonds closed at 20.06%, 19.92% and 18.40%, a change of +3bps, -7bps and -2bps from 20.03%, 19.99% and 18.38% on a week-on-week basis.
Th The FGN is expected to raise ₦233.31billion in its upcoming Treasury Bill auction scheduled to hold on Wednesday, 5th September, 2024.
We expect the system liquidity to reduce in the absence of any inflow, as investors anticipate the upcoming treasury Bills auction next week.
THE EQUITIES MARKET
Market Capitalization and All-Share Index increased by 0.63% to close at ₦55.48trillion from ₦55.139trillion and 96,579.54 from 95,973.45 the previous week.
On a sectoral basis, the Banking, Insurance, Oil & Gas, Consumer Goods and Industrial Goods indices all closed higher at 1.96%. 5.76%, 8.50%, 3.46% and 0.08% on a week-on-week basis.
A total turnover of 2.82 billion shares worth ₦53.05billion in 50,488 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 5.64 billion shares valued at ₦33.05billion that exchanged hands last week in 42,006 deals.
Notable gainers this week were Oando Plc and Deap Capital Management & Trust Plc, while notable losers were Transcorp Power Plc and MTN Nigeria Communications Plc.
We expect the market to trade at the same levels next week.
CURRENCY
| ‘(N/$) | 30/8/2024 | 23/8/2024 | W-O-W% |
| NAFEM | 1,598.56 | 1,570.14 | 1.81% |
| Parallel | 1,645.00 | 1,605.00 | 2.49% |
TOP TRADES BY VOLUME
| TICKER | TRADES | VOLUME | VALUE(N’m) |
| JBERGER | 271 | 120,757,504 | 19,630.75 |
| OANDO | 3,392 | 93,856,895 | 6,877.06 |
| GTCO | 284 | 26,280,318 | 1,196.23 |
| UBA | 477 | 25,695,113 | 580.21 |
| ZENITHBANK | 369 | 11,422,859 | 436.11 |
TOP TRADES BY VALUE
| TICKER | TRADES | VOLUME | VALUE(N’m) |
| JBERGER | 271 | 120,757,504 | 19,630.75 |
| OANDO | 3,392 | 93,856,895 | 6,877.06 |
| GTCO | 284 | 26,280,318 | 1,196.23 |
| UBA | 477 | 25,695,113 | 580.21 |
| ZENITHBANK | 369 | 11,422,859 | 436.11 |
TOP GAINERS
| TOP GAINERS TICKER | OPEN | CLOSE | CHANGE | % |
| OANDO | 47.85 | 76.90 | 29.05 | 60.71% |
| DEAPCAP | 0.56 | 0.88 | 0.32 | 57.14% |
| MCNICHOLS | 0.99 | 1.55 | 0.56 | 56.57% |
| DAARCOMM | 0.47 | 0.73 | 0.26 | 55.32% |
| NSLTECH | 0.43 | 0.66 | 0.23 | 53.49% |
TOP LOSERS
| TICKER | OPEN | CLOSE | CHANGE | % |
| TRANSPOWER | 372.40 | 335.20 | -37.20 | -9.99% |
| MTNN | 199.80 | 180.00 | -19.80 | -9.91% |
| UPL | 2.54 | 2.30 | -0.24 | -9.45% |
| EUNISELL | 19.75 | 18.20 | -1.55 | -7.85% |
| CWG | 3.20 | 3.00 | -0.20 | -6.25% |
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Sources: Yahoo Finance, Trading Economics, Investing.com, CBN, NGX, FMDQ, Business Day, The Cable Ng, DMO, NBS, Alpha10 Research.