08 June 2018 ( Lagos)

Global Market

In Japan, economic data released was disappointing as GDP contracted 0.2% QoQ for the first time in eight quarters. Specifically, unchanged from the preliminary reading, annualized Q1 18 GDP shrank 0.6% YoY driven largely by a slowdown in private consumption (-1.0% QoQ). Elsewhere in the U.S, trade deficit in the month of April fell 2.1% MoM to a seven-month low of $46.2 billion underpinned by an expansion in exports as well as a decline in imports. Precisely, exports surged 0.3% MoM to $211.3 billion, helped by an increase in shipments of industrial materials while imports dipped 0.2% MoM to $257.4 billion on the back of Trump protectionism.

Domestic Market:

Nigeria’s trade balance started the year on a solid note with trade surplus expanding 21% QoQ (+180% YoY) to $6 billion. The higher trade surplus was supported by a 20% QoQ (+36% YoY) increase in exports to $13 billion on the back of higher oil exports (+10% QoQ to $9.9 billion) which accounts for 76% of total ex- port. Additionally, quarterly numbers revealed that imports increased to $7 billion almost at the same rate as exports (QoQ: +19%; YoY: +8%). Elsewhere, Nigeria FX reserve declined for the fourth consecutive week to $47.44 billion (-36 bps WoW) as the CBN continues to support the currency through increased forex intervention in various segments of the FX market. Analysts saw the impact of this on the Naira as it gained 28bps WoW to N361/$ at the parallel market while it traded almost flat (+2bps WoW to N360.91/$) at the I&E Window.

Equities

The NGSE ASI reversed a five consecutive week of decline, gaining 5.03% WoW to close the week at 38,669.23 ppts. Leading the advancers were PRESTIGE (+45.65%), ( JAPAULOIL ) (+17.89%), NASCON (+17.89%) and CILEASING (+17.52%) while ( NPFMCRFBK ) (-14.51%), ( HMARKINS ) (-12.90%) and ( FIRSTALUM ) (-9.09%) topped the decliners. On a sectoral basis, the Brewers (+11.11%), Cement (+6.11%), Banking (+4.55%), Food (+4.08%), Personal Care (+2.98%), Oil & Gas and Insurance (+0.61%) closed in green offsetting losses in Real Estate (-0.31%) and Construction (-0.11%).

Fixed Income Market:

Fixed income yields continued its uptrend, with average fixed income yields rising 40bps WoW to 13.34%. This mirrored elevation at both ends of the curve as average treasury bill yields inched up 57bps WoW to 13.29%, while average bond yields rose by 22bps to 13.4%. The uptick in fixed income yields was in part driven by strain on Naira liquidity as CBN continued its OMO sales, selling N232 billion and N9.8 billion worth of ~ 230-day (12.15%) and 100-day paper (11.05%) respectively.

Source: ARM Securities Limited.