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January 2023 – WMR

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

EquitiesThis weekPrior week
S&P 5004.16%4.16%
NGX ASI2.60%2.50%
Fixed Income
Open Buy Back9.67%9.67%
1 year T-bill5.95%5.95%
5-year bond12.24%12.24%
10-year bond14.40%14.40%
FX Reserves ($’bn)37.0837.08
Crude Oil (N/$)

Key Economic Variables

CPI (%) YoYDEC-22NOV-22
Headline Inflation21.34%21.47%
GDP (%) YoYQ3 22Q2 22
Real GDP2.25%3.54%
Monetary Policy Rate (%)16.50%

Securities Recommendations:

AXA Mansard Money Market FundThe 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.
UCAP FD (USD)Protects the investor from devaluation of the Naira and exchange rate risk, with a return of c.5% p.a

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