Macro-economic update of week of 26 November 2018   

Global Economy


03 December 2018 : The United States, Canada and Mexico signed a new trade deal on Friday replacing the North American trade pact (NAFTA) after over a year of negotiations. The new deal offers a glimmer of certainty amid rising global tensions over trade even as Trump and Chinese President Xi Jinping are set to meet on Saturday. On another note, Personal income in the US for the month of October increased by $84.9 billion (0.5% MoM) in October, while disposable personal income increased $81.7 billion (0.5% MoM) and personal consumption expenditures (PCE) increased $86.9 billion (0.6% MoM).


Domestic Economy


Following the increasing FX demand ahead of the festive period and panic buying due to recent slump in crude oil prices, which have seen the Naira weakened against the US at the parallel market in recent weeks (1.4% WoW and 1.8% MtD), the apex bank during the week reiterated its ability to comfortably supply FX across markets. Nota- bly, the apex bank released a circular yesterday, stating its intention to increase intervention sales to BDCs to four times a week (previously Monday, Wednesday and Friday), with an additional $15,000 sales per BDC on Thursdays. As a result, weekly CBN intervention sales to BDCs per week will now increase to $60,000 per week from previous $45,000 in order to meet the increased demand for Personal/Business and Travel allowance. Elsewhere, the FG, States and local governments shared a total of N788.1 billion for the month of October, N89 billion higher than the previous month.


Equities


The Nigeria equity market booked another week of loss, with the NSE ASI declining by 2.54% WoW to 30,874.17 pts and the market capitalization shedding N293.7 billion over the week. The loss was driven by declines in bellwether stocks in the banking (FBNH: -6.58%, GUARANTY: -5.63%, STANBIC: -2.04%, UBA: -3.85% and ZENITH: -3.33%), cement (DANGCEM: -4.15%, LAFARGE: -7.14%) and Oil & gas (SEPLAT: -9.68%) sectors. Top decliners during the week were DIAMONDBNK (-31.58%), PRESTIGE (-30.38%) and UNITYBNK (-18.82%).


Fixed Income


Average yields in the fixed income market dipped for the second consecutive week by 5bps WoW to 14.87%. The plunge in the Naira yield curve was driven by buying senti- ment at the short end of the curve prior to CBN’s OMO sale (N371.6 billion) on Thursday at higher rates (Average OMO rates: +20bps WoW to 13.2%). Elsewhere, activi- ties at the long end of the curve were largely quiet on most trading days leaving bond yields relatively flattish, however, following higher stop rates at yesterday’s OMO auc- tion bond yields rose 1bps WoW to 15.36%.


Reporting for EasyKobo on Monday , 03 December 2018 in Lagos, Nigeria


Source: ARM Securities Limited


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