Macro-economic wrap-up of week of 17 Sep '18   


Global Economy 

 

24 September 2018 : In the light of recent trade spat between China and US, US trade deficit narrowed 17% QoQ to $101.5 billion on the back of faster growth in exports. We link this to the accelerated pace of exports to places like China before retaliatory trade tariff. Elsewhere, inflation in Canada eased to 2.8% in August from 3.0% in the previous month, but still floating way ahead of Bank of Canada’s target of 2%. In other region, the Bank of Japan left its key interest rate unchanged at -0.1% and maintained its optimistic view on the economy despite escalating global trade tensions. Trade figures from Japan showed its trade with other countries stood at a deficit of 444.6 billion Yen (+92% MoM) for the second consecutive month on the back of faster growth in imports of crude oil and natural gas.


Domestic Economy


Total debt of states government continued to spiral in H1 18 with latest report by the National Bureau of Statistics (NBS) showing total states debt expanded 13.6% YTD to N4.8 trillion. The increase reflected a jump in both domestic (+15.9% YTD to N3.0 trillion) and external (+7.8% YTD to $4.2 billion) debt stock. Analyzing the debt stock, we observed Lagos State alone accounted for 36% of the overall increase in debt stock. In terms of composition of total debt stock, Lagos remain the largest debt holder (28%) with about N960 billion debt. Lagos, Akwa-Ibom, Cross River, Delta and Rivers account for almost 40% of total debt stock.


Equities


The Nigerian equity market reversed the loss recorded in the previous week with NSE ASI expanding slightly by 0.66% WoW to close at 32,540 pts. The positive performance largely reflected gains in ACCESS (+4.5%), FBNH (+5.5%), UBA (+8.1%), ZENITHBANK (+3.7%), WAPCO (+13.5%), DANGSUGAR (+5.8%), NESTLE (+2.2%) and SEPLAT (+2.5%). An overview of the sectorial performance showed that Banking (+2.4%), Food (+2.4%), Oil & Gas (+2.6%), Brewers (+0.03%) and Real Estate (+0.37%) sectors closed in the positive territory while Cement (-1.8%), Insurance (-2.3%) and Personal Care (-0.3%) closed in the red.


Fixed Income


Yields in the fixed income market dipped 48bps WoW to 14.37%, driven by strong buy pressure following pent up market liquidity (Week’s average: ~ N400 billion) emanating from Paris club refund of N14.9 billion and OMO maturity (N219 billion). The CBN sold N338 billion worth of OMO bills to mop up excess monies in the system – with the 364 Day paper closing at 13.5%. However, the 1-year T-bills paper closed at 13.48%, due to market reaction to lower stop rates at this week’s NTB auction. Overall, average T-bills and Bond yields dipped 68bps and 28bps to 13.69% and 15.05% respectively.


Reporting for EasyKobo on Monday , 24 September 2018 in Lagos, Nigeria


Source: ARM Securities Limited


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