Key events on the Global Scene:
- Stocks took a beating this week, as FED officials signaled high-interest rates were needed to keep pressuring inflation to a target of 2.0% despite signs of slowing down, thereby defying market expectations.
- Oil rallied to the highest since mid-November, capping off its second straight week of gains on optimism over increased demand from China. Brent closed at $86.3
Key events on the Domestic Scene:
- Nigeria’s inflation for December 2022 printed lower at 21.34% y/y (V. 21.47% in November) but rose by 1.71% m/m. This increase m/m can be attributed to the sharp increase in demand usually experienced during the festive season, increase in the cost of production e.g increase in energy cost, transportation cost and exchange rate depreciation.
Capital Market Review/Outlook (FI and Equities):
- The Nigerian equity market closed positive with buying interest in the agricultural, oil & gas sector. Similarly, market capitalization grew by #44.7bn w/w to #28.6tn while YTD returns closed at 2.6%.
- The bears sealed trading activities in the domestic bonds market as the average yield rose by 60bps w/w to settle at 13.3%. Yields expanded steadily despite surplus liquidity in the system. We noticed sell pressure at the mid to long end of the curve.
- In the SSA, Eurobonds market performance was bearish as the average yield rose 1.6pts w/w to 20.5%, as the region’s weak economic fundamentals continue to weigh on asset pricing.
Macro Economic Variables
| Equities | This week | Prior week |
|---|---|---|
| S&P 500 | 4.16% | 4.16% |
| NGX ASI | 2.60% | 2.50% |
| Fixed Income | ||
| Overnight | 10.00% | 10.00% |
| Open Buy Back | 9.67% | 9.67% |
| 1 year T-bill | 5.95% | 5.95% |
| 5-year bond | 12.24% | 12.24% |
| 10-year bond | 14.40% | 14.40% |
| Currency | ||
| FX Reserves ($’bn) | 37.08 | 37.08 |
| USD/NGN | 461.90 | 461.90 |
| Crude Oil (N/$) | ||
| Brent | 84.39 | 84.39 |
Key Economic Variables
| CPI (%) YoY | DEC-22 | NOV-22 |
| Headline Inflation | 21.34% | 21.47% |
| GDP (%) YoY | Q3 22 | Q2 22 |
| Real GDP | 2.25% | 3.54% |
| Monetary Policy Rate (%) | 16.50% |
Securities Recommendations:
| Security | Rationale |
| AXA Mansard Money Market Fund | The fund is currently at c.11.50% levels which matches the present offerings from top tier commercial banks. This enables clients to maximise their funds in the short term, while also positioning their portfolio to benefit from any spike in yields. |
| TENORED DEPOSIT (NGN) | ARM at c. 15%. |
| UCAP FD (USD) | Protects the investor from devaluation of the Naira and exchange rate risk, with a return of c.5% p.a |
