GLOBAL ECONOMY
The initial jobless claims in the US dropped by 5,000 from the previous week to 227,000 for the period ending August 30th, and below market expectations of 230,000 while the Unemployment rate fell to 4.20% in August of 2024 from 4.30% in the prior month, aligning with market expectations. During the week, the ADP Employment data also showed a 99,000 increase, lower than both 111,000 reported in July and the market expectation of 145,000.
The British pound was around £1/$1.31 as the month began, following a 2.10% gain in August, as expectations of conflicting monetary policies between the US and the UK continue to support the currency. Weak economic data for the US and Federal reserve (Fed) Chair Jerome Powell’s indications of potential rate cuts have weakened the dollar, while stronger UK economic data and the Bank of England’s cautious approach to further rate cuts have strengthened the pound.
The Euro weakened below €1/$1.10 after touching a one-week high of $1.11 on September 5th as investors assessed the latest economic data for hints on the degree of rate cuts by the European Central bank (ECB) and the Fed. GDP growth in the Eurozone was revised lower to 0.20% during the second quarter, supporting concerns that restrictive monetary policy is impacting the EU’s economy.
China’s foreign exchange reserves increased by $31.80billion to $3.29trillion in August 2024 from $3.26trillion in July in its second straight month of expansion as the dollar fell against other currencies. Last month, the yuan gained against the dollar, as the dollar weakened against other major currencies, due to tension over the past weeks’ US job data.
We await the release of inflation data for August from the US and China, and the decisions regarding the ECB’s Interest Rate.
GLOBAL MARKETS
Global stocks fell on Friday, weighed down by concerns over a slowing labor market and tech selloffs in the US. The Nasdaq, S&P 500 and Dow Jones indices all closed lower by -5.86%, -4.24% and -2.93% to 18,423.66, 5,408.42 and 40,345.41, respectively.
The London’s Financial Times Stock Exchange (FTSE) 100, Germany’s Deutscher Aktien (DAX) and Cotation Assistée en Continu (CAC) 40 in Paris fell by -2.32%, -3.20% and -3.65% to 8,181.47, 18,301.90 and 7,352.30, respectively.
The Hang Seng and Topix Indices also fell by -3.03% and -4.24% to 17,444.30 and 2,597.42, respectively.
We expect the market to trade cautiously, as Investors await the Inflation data report from the US, and subsequent Fed decision regarding rate cut size.
DOMESTIC ECONOMY
The Purchasing Managers’ Index (PMI) for August 2024, released by the Central Bank of Nigeria (CBN), showed an expansion in business activities after 13 months of consecutive contraction. The composite PMI for August 2024 moved to 50.20 points, indicating a growth in economic activities. A PMI above 50 points indicates an expansion, while a figure below 50 points signifies a contraction.
Nonye Ayeni, Executive Director and CEO of the Nigerian Export Promotion Council (NEPC), disclosed during a media briefing in Abuja that Nigeria’s non-oil export sector recorded total receipts of $2.70billion in the first half of 2024, driven by increasing global demand for Made-in-Nigeria products, an increase of 6.72% increase from $2.53billion recorded in the same period in 2023.
According to the International Payment Statistics from the CBN, Nigeria has spent $2.78billion, 64.00% of the total official dollar payments made between January and July 2024 on servicing foreign debt. This is an increase of 56.63% compared to $1.81billion which was 46.00% of total international payments on debt service in the same period last year.
On Monday, the Chairman of the Presidential Committee on Fiscal Policy, Taiwo Oyedele, revealed that the committee has proposed to the Federal Government the removal of taxes on food, public transportation, house rents, and other basic necessities. He stated that the proposal also includes the exemption of value-added tax (VAT) on these essential necessities.
The National Bureau of Statistics is set to release data on the Inflation rate for August on Monday, 15th September, 2024.
DOMESTIC MARKETS
The Securities and Exchange Commission (SEC) has recently announced the implementation of new measures aimed at simplifying the process for companies to list their shares on the Nigerian Exchange. This initiative is part of broader efforts to enhance the attractiveness and efficiency of the Nigerian capital market.
Dr. Emomotimi Agama, the Director-General of SEC stated that faster listing processes would boost market liquidity, promote economic growth, and strengthen investor confidence. He also stated that the Commission had been actively digitizing its operations, including the submission and processing of applications for securities registration, to reduce delays caused by manual processes.
MONEY MARKET AND FIXED INCOME
System liquidity opened the week positive but decreased by ₦900.94billion during the week, following the OMO auction settlement worth ₦459.60billion to ₦276.66billion. Consequently, the Open Repo Rate (OPR) increased to 31.25% from 18.11% while the Overnight Rate (O/N) increased to 31.70% from 20.06% the previous week. The Nigerian Treasury Bills (NT-Bills) market average yield decreased by -154bps to 19.64% against 21.18% the previous week.
In the Bonds market, the average benchmark yield for the Short-tenor, Medium-tenor and Long-tenor Bonds decreased by -101bps, -59bps and -45bps to close at 19.08%, 19.09% and 17.55% on a week-on-week basis, respectively.
At the Treasury Bills auction held this week, the DMO offered ₦233.31billion and received bids totaling 4.84x the amount offered. The auction was fully sold, and the stop rates for the 91-Day, 182-Day and 364-Day Bills decreased by 120bps, 170bps and 196bps to 17.00%, 17.50% and 18.94%, respectively. The FGN is expected to raise ₦161.88billion in its upcoming Treasury Bill auction scheduled to hold on Wednesday, 11th September 2024.
We expect the system liquidity to remain negative due to the upcoming treasury Bills auction next week, in the absence of any inflow.
THE EQUITIES MARKET
Market Capitalization and All-Share Index increased by 0.15% to close at ₦55.39trillion from ₦55.48trillion and 96,433.53 from 96,579.54 the previous week.
On a sectoral basis, the Banking, Insurance, Consumer Goods and Industrial Goods indices all closed lower at -0.12%. -4.45%, -1.17% and -0.17%, respectively. The Oil & Gas index was the sole gainer, closing at 1.52% on a week-on-week basis.
A total turnover of 2.14 billion shares worth ₦51.22billion in 55,603 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 2.82 billion shares worth ₦53.05billion in 50,488 deals that exchanged hands last week.
Notable gainers this week were Industrial & Medical Gases Nigeria Plc and Berger Paints Plc, while notable losers were RT Briscoe Plc and FTN Cocoa Processors Plc.
LISTINGS
- Nigerian Breweries Plc: Activation of Code for Trading in Rights of Nigerian Breweries Plc – Monday, 2nd September, 2024
The Nigerian Exchange Limited (NGX) on Monday, released a notification of trading in Nigerian Breweries Plc’s Rights Issue of 22,607,491,232 ordinary shares of 50 Kobo each at ₦26.50 per share on the basis of eleven (11) new ordinary shares for every existing five (5) ordinary shares held. The qualification date for this Rights Issue was Friday, 12 July 2024.
We expect the market to trade at the same levels next week.
CURRENCY
TOP TRADES BY VOLUME
TOP TRADES BY VALUE
TOP GAINERS
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DISCLAIMER
This publication is produced by Alpha10 Group solely for the information of users who are expected to make their own investment decisions without undue reliance on any information or opinions contained herein. The opinions contained in the report should not be interpreted as an offer to sell, or a solicitation of any offer to buy any investment. Alpha10 Group may invest substantially in securities of companies using information contained herein and may also perform or seek to perform investment services for companies mentioned herein. Whilst every care has been taken in preparing this document, no responsibility or liability is accepted by any member of the Group for actions taken as a result of information provided in this publication. Alpha10 Group. 13, Mambolo Street, Zone 2, Wuse, Abuja. Visit us at www.alpha10group.com.
Sources: Yahoo Finance, Trading Economics, Investing.com, CBN, NGX, FMDQ, Nairametrics, DMO, NBS, Alpha10 Research.