Key events on the Global Scene:
- The US released its Q4’2022 figures which rose by 2.9% in the fourth quarter. The economy received a boost from consumers, non-residential fixed income and government spending. Despite the strong economic data, a recession could still be in the works as markets anticipate more rate hikes in the coming months.
- Oil prices gained momentum on the back of the release of the US economic data and the gradual re-opening of the Chinese economy providing a boost in the oil market. Brent crude oil close at $88.59 per barrel.
Key events on the Domestic Scene:
- The Monetary Policy Committee raised its key interest rate by 100 bps to 17.50% in their bid to tackle rising inflation levels. CRR and Liquidity ratio remained static at 32.50% and 30% respectively.
Capital Market Review/Outlook (FI and Equities):
- The domestic equity market sustained bearish sentiments to close out the week, as the ASI declined by 0.18% day on day and a YTD decline to 2.74%. The negative performance was on the back of increased selling interests seen on the likes of MTN (-1.75%) and GUINNESS (3.71%).
- The local bond market traded bullish, as system liquidity remained buoyant majority of the week. As a result, buy interests were seen on the 24’s, 37’s and 49 papers with bids at 15.4% levels for the 37’s and 49’s. Nonetheless, offers were much lower as investors began taking position ahead of the upcoming bond auction.
- The SSA Eurobonds space traded with mixed sentiments on the back of the newly released US GDP figures and jobless claims figures which fell by 6000, signaling that the Feds could sustain their hawkish stance much longer than anticipated. Nigerian and Egypt papers traded lower during the week with the average yield across the Nigerian sovereign papers printing at 10.54%.
Macro Economic Variables
| Equities | This week | Prior week |
|---|---|---|
| S&P 500 | +1.10% | 4.16% |
| NGX ASI | 2.74% | 2.60% |
| Fixed Income | ||
| Overnight | 11.00% | 10.00% |
| Open Buy Back | 10.50% | 9.67% |
| 1 year T-bill | 3.74% | 5.95% |
| 5-year bond | 13.37% | 12.24% |
| 10-year bond | 14.80% | 14.40% |
| Currency | ||
| FX Reserves ($’bn) | 37.08 | 37.08 |
| USD/NGN | 461.75 | 461.90 |
| Crude Oil (N/$) | ||
| Brent | 88.49 | 82.08 |
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 (%) | 17.50% |
Securities Recommendations:
| Security | Rationale |
| AXA Mansard Money Market Fund | The fund is currently at c.11.57% 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) | BAOBAB at c. 14.35%. |
| UCAP FD (USD) | Protects the investor from devaluation of the Naira and exchange rate risk, with a return of c.5% p.a |
