| INFLATION RATE (%) | MPR (%) | BOT (N’m) | CURRENCY (NAFEM) | EXTERNAL RESERVE (US $’b) | DEBT (N’tri) | UNEMPLOYMENT | ||||
| Current | 2.99% | 34.19% | 26.75% | (₦6,524.17) | ₦1,574.20 | $82.82 | 36.87 | 121.67 | 5.00% | 55.98 |
| Previous | 3.54% | 33.95% | 26.25% | (₦1,414.30) | ₦1,617.08 | $80.59 | 36.79 | 97.34 | 4.20% | 55.50 |
GLOBAL ECONOMY
The Global economy and financial markets witnessed a wave of selloffs, that had already begun to emerge late last week when disappointing US economic data from last week created fears of a recession in the world’s largest economy. However, fresh data released this week set off a rebound in the US economy.
Initial Jobless Claims filing for unemployment insurance fell more than expected last week, offering some relief to Investors worried about further signs of decline in the US labor market and economy. Data from the Department of Labor showed there were 233,000 initial jobless claims filed at the end of last week, down from 250,000 the previous week and below 240,000 projected by economists.
The British Pound rose to £1/$1.28 this week, yet it’s poised for its fourth week of decline in a row, marking its longest losing streak since last September. The pound has been pressured by the Bank of England’s recent interest rate cut and the potential for further cuts this year, as the central bank promptly adjusted monetary policy in response to falling inflation. This shift has led to mixed signals for currency traders, who are also contending with broader global economic strains and internal UK matters. More recently, the unrest in the UK, including anti-immigration riots and speculation about tax hikes, has reduced enthusiasm for the Pound.
In Europe, the Euro stabilized at €1/$1.09 following weak economic data from the US, as traders in Europe also increased expectations for European Central Bank (ECB) rate cuts. Unemployment in France declined by 0.20% points to a rate of 7.30% in the Q2, 2024 from 7.50% in Q1, 2024, according to data shared by the country’s national statistics agency, Institute National de la Statistique et des Études Économiques (INSEE), on Friday. This means that 2.30 million people in France are out of work, a quarterly drop of 40,000.
China’s annual inflation rate, measured by changes in the Consumer Price Index (CPI) climbed to 0.50% in July 2024 from 0.20% in June 2024, exceeding market forecasts of 0.30% and pointing to the highest figure since February as the CPI rose to 103.20 from 102.70 in June 2024. As a result, China’s 10-year government bond yield rose to around 2.15% as traders reacted to the latest inflation figures.
We await the release of the CPI and PPI reports from the US, and speeches by Federal Reserve officials regarding the interest rate.
GLOBAL MARKETS
Global markets presented a mixed picture this week, starting with a sharp decline on Monday and a rebound on Thursday, due to the reassuring report on weekly jobless claims that gave investors a reason to buy back. Major indices recovered from their recent lows as Investors sought dip-buying opportunities following the significant selloffs earlier in the week.
With a modest rally on Friday, the major indexes closed the week near where they started. The Nasdaq had a positive close, rising by 0.41% to 18,513.10 from 18,438.06, while the S&P 500 and Dow Jones indices closed lower, by -0.04% and -0.60% to 5,344.16 and 39,497.54 from 5,346.56 and 39,737.26 the previous week.
The London’s Financial Times Stock Exchange (FTSE) 100 closed lower by -0.08% to 8,168.10 from 8,174.71, while Germany’s Deutscher Aktien (DAX) and Cotation Assistée en Continu (CAC) 40 in Paris closed slightly higher by 0.35% and 0.25% to 17,722.88 and 7,269.71 from 17,661.22 and 7,251.80 the previous week.
Chinese stock markets rebounded as well following better-than-expected inflation data for July. The Hang Seng index rose by 0.85% to 17,090.23 from 16,945.51 while the Topix Index fell by -2.14% to 2,483.30 from 2,537.60 the previous week.
We expect cautious trading in the market, as Investors still watch out for reassurances of economic resilience in the US and await the Jobless claims data on Thursday next week.
DOMESTIC ECONOMY
The Central Bank of Nigeria (CBN) this week, reported a significant impact from its policy measures, with net foreign exchange inflows increasing by 55.00% to $25.40billion in the first half of the year. This surge is attributed to a substantial rise in capital importation, peaking at $6billion in June 2024, and record levels of diaspora remittances entering through official channels.
Unity Bank and Providus Bank have successfully formed a merger which was facilitated by a substantial ₦700billion bailout from the Central Bank of Nigeria (CBN). This financial support was crucial in resolving Unity Bank’s obligations, ensuring the stability of the merged entity, and preventing systemic risks. The CBN’s strategic intervention, which includes a 20-year term loan with favorable conditions, aims to strengthen the financial system and strengthen market confidence.
The Central Bank of Nigeria (CBN) recently conducted a Retail Dutch Auction System (RDAS) on August 6, 2024, to mitigate the rising demand pressures in the foreign exchange (FX) market and to promote price discovery. The Retail Dutch Auction System refers to a method of auctioning where the auctioneer starts with a high asking price and then gradually lowers it until a participant accepts the price. In this auction, the CBN sold a total of $876.26million to 26 qualified banks at a rate of ₦1,495 per dollar. This move came in response to the strain on the FX market, intensified by unmet demand from end users, particularly as businesses and individuals scramble for foreign currency amid the ongoing economic challenges in Nigeria.
The Central Bank of Nigeria (CBN) has recently provided further details on the procedures for divestment and repatriation of foreign investments in relation to the Certificate of Capital Importation (CCI). The new guidelines require that all transactions must present evidence of an electronic CCI and evidence of redemption of investment in local currency assets (money market instrument, debt securities, equities, etc.). This clarification aims to ensure smooth and lawful foreign investment transactions and compliance with the Foreign Exchange Manual.
The National Bureau of Statistics is set to release data on the Inflation rate for the month of July 2024 on the 15th of August, 2024.
DOMESTIC MARKETS
MONEY MARKET AND FIXED INCOME
System liquidity remained positive for most of the week but turned negative by the end of the week, decreasing by -₦672.73billion to close at -₦12.24billion. Consequently, the Open Repo Rate (O/R) and Overnight Rate (O/N) increased by 778bps and 791bps to 33.39% and 33.97%, respectively. The Nigerian Treasury Bills (NT-Bills) market average yield increased by 71bps to 25.98% against 25.27% the previous week.
In the Bonds market, the average benchmark yield for the Short-tenor, Medium-tenor and Long-tenor Bonds closed at 20.01%, 20.30% and 18.51%, a change of +23bps, +27bps and -2bps from 19.78%, 20.03% and 18.53% on a week-on-week basis.
At the Treasury Bills auction held this week, the DMO offered ₦216.09billion and received bids totaling 2.25x the amount offered. The auction was fully sold, and the stop rates for the 91-Day and 182-Day Bills remained unchanged at 18.50% and 19.50%, while the stop rate for the 364-Day Bill decreased by 21bps to 21.89%.
We expect the market to trade with mixed sentiments next week, as Investors consider the impact of recent global trends and domestic events. The DMO rescheduled the Bond auction earlier scheduled for 12th August 2024 to 19th August 2024.
THE EQUITIES MARKET
Market Capitalization and All-Share Index increased by 0.87% to close at ₦55.98trillion from ₦55.50trillion and 98,592.12 from 97,745.73 the previous week.
On a sectoral basis, the Banking, Insurance, Consumer Goods, and Oil and Gas Indices all closed higher at 5.14%, 1.79%, 2.35% and 0.97% while the Industrial Goods Index was the sole loser at -3.67% on a week-on-week basis.
A total turnover of 2.68 billion shares worth ₦49.02billion in 47,451 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 3.39 billion shares valued at ₦52.30billion that exchanged hands last week in 44,814 deals.
Notable gainers this week were Oando Plc and RT Briscoe Plc, while notable losers were Champion Brew Plc and Bua Cement Plc.
We expect market to trade at the same levels this week, as Investors continue profit-taking as a result of reports from Q2 released financials of companies and consider sector rotation and portfolio repositioning.
CURRENCY
| ‘(N/$) | 09/8/2024 | 02/8/2024 | W-O-W% |
| NAFEM | 1,574.20 | 1,617.08 | -2.65% |
| Parallel | 1,600.00 | 1,595.00 | 0.31% |
TOP TRADES BY VOLUME
| TICKER | TRADES | VOLUME | VALUE(N’m) |
| VERITASKAP | 356 | 103,242,493 | 125.59 |
| OANDO | 242 | 52,388,487 | 2,126.97 |
| UBA | 632 | 42,750,176 | 966.69 |
| ZENITHBANK | 540 | 31,953,888 | 1,221.33 |
| ACCESSCORP | 655 | 24,237,209 | 474.02 |
TOP TRADES BY VALUE
| TICKER | TRADES | VOLUME | VALUE(N’m) |
| OANDO | 242 | 52,388,487 | 2,126.97 |
| ZENITHBANK | 540 | 31,953,888 | 1,221.33 |
| GTCO | 417 | 22,271,890 | 1,024.37 |
| UBA | 632 | 42,750,176 | 966.69 |
| ACCESSCORP | 655 | 24,237,209 | 474.02 |
TOP GAINERS
| TICKER | OPEN | CLOSE | CHANGE | % |
| OANDO | 25.30 | 40.60 | 15.30 | 60.47% |
| RTBRISCOE | 0.84 | 1.27 | 0.43 | 51.19% |
| JAPAUL | 1.76 | 2.39 | 0.63 | 35.80% |
| ACADEMY | 2.14 | 2.88 | 0.74 | 34.58% |
| UCAP | 12.25 | 15.95 | 3.80 | 31.28% |
TOP LOSERS
| TICKER | OPEN | CLOSE | CHANGE | % |
| CHAMPBREW | 3.26 | 2.77 | -0.49 | -15.03% |
| BUACEMENT | 143.20 | 128.90 | -14.30 | -9.99% |
| UPL | 2.42 | 2.18 | -0.24 | -9.92% |
| UNIONDICON | 8.10 | 7.30 | -0.80 | -9.88% |
| DEAPCAP | 0.52 | 0.47 | -0.05 | -9.62% |
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. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email. Alpha10 Group. 13, Mambolo Street, Zone 2, Wuse, Abuja. Visit us at www.alpha10group.com.
Sources: Yahoo Finance, Trading Economics, EuroNews, South Morning China Post, Investing.com, CBN, NGX, FMDQ, Nairametrics, Punch, DMO, NBS, Alpha10 Research.