Key events on the Global Scene:
- The US Federal Reserves released the minutes from the last meeting, indicating that members are still dedicated to tackling inflation through interest rate hikes. This drove a number of European and US stock indices higher at the last trading session.
- The ECB shared similar sentiments as they continued to maintain a hawkish stance. The MPC stated that ‘a monetary policy towards rate cuts was not imminent’ as labour shortage and demand for higher wages persist.
- Crude oil prices gained momentum during the week on the back of speculative activities of another Russian crude oil production cut and a positive outlook on the reopening of the Chinese economy. This was reversed as prices fell on Friday as bearish sentiments built up driven by inflationary concerns and continued build up in US. inventory.
Key events on the Domestic Scene:
- The Nigerian economy recorded a GDP growth of 3.52% in Q4’22, in tandem with IMF’s forecast of 3.00% as the non-oil sector of the economy continues to drive growth. The Q4’22 figure however, decreased by 0.48% in relation to Q’4 2021, driven largely by a decline in the Agricultural sector during the year.
Capital Market Review/Outlook (FI and Equities):
- The domestic bourse closed the week on a positive note with the All Share Index advanced by 0.55% day-on-day and a year-to-date return of 7.22%. Buying activities seen on major stocks like ZENITHBANK (+0.4%) and GTCO (40.2%).
- The FGN bond market traded with bullish sentiments with sell offs seen on the likes of the 28’s and 37’s. A moderation was seen in the market towards the end of the trading day with average yields increasing by 1 basis point to close at 13.7%.
- The SSA Eurobonds market closed the week with bullish sentiments, with buy interests witnessed across all tenors. Notwithstanding, the Ghana Eurobonds experienced some level of sell offs mainly hinged on the delayed meeting with China on potential debt cancellation. Average yields declined across the domestic Eurobond curve to close at 11.79%.
Macro Economic Variables
| Equities | This week | Prior week |
|---|---|---|
| S&P 500 | -10.86% | 19.33% |
| NGX ASI | 7.22% | 6.38% |
| Fixed Income | ||
| Overnight | 10.81% | 17.81% |
| Open Buy Back | 10.50% | 17.13% |
| 1 year T-bill | 3.66% | 2.24% |
| 5-year bond | 13.05% | 14.11% |
| 10-year bond | 14.31% | 15.94% |
| Currency | ||
| FX Reserves ($’bn) | 36.72 | 36.79 |
| USD/NGN | 461.32 | 461.25 |
| Crude Oil (N/$) | ||
| Brent | 82.96 | 83.97 |
Key Economic Variables
| CPI (%) YoY | JAN-23 | DEC-22 |
| Headline Inflation | 21.82% | 21.34% |
| GDP (%) YoY | Q4 22 | Q3 22 |
| Real GDP | 3.52% | 2.25% |
| Monetary Policy Rate (%) | 17.50% |
Securities Recommendations:
| Security | Rationale |
| AXA Mansard Money Market Fund | The return on the fund has been expanding benefitting from the expansion in yields on short term instruments. The fund is on track to hit the c.12% level which matches the present offerings from top tier commercial banks. This will allow clients stay short and take advantage of these opportunities. |
| USD FD | USD FD Protects the investor from exchange rate risk with a return of c.4% – 5%p.a |
