Key events on the Global Scene:
- The past week witnessed subdued activity in both equities and the currency markets. Notably, the focal point was the impactful speech by Fed Chair Powell, emphasizing the imperative of maintaining elevated interest rates to safeguard the ongoing fight against inflation. Consequently, the US 2-Year Yield surged, marking a significant increase of 326 basis points, rising from 4.85% to 5.0%.
- Furthermore, the labour market retained its resilient stance, with unemployment claims slightly surpassing market projections. Despite these developments, overall market dynamics exhibited a restrained demeanour as participants awaited pivotal data events scheduled for the upcoming week, both from the broader market and the Federal Reserve. This anticipation contributed to the prevailing sense of caution and limited market activity during the reviewed period.
Key events on the Domestic Scene:
- N-Tbills auction revealed an increase in stop rates, reaching 16.75% from the previous 13%, with the influence of prior OMO auctions that closed at 17.5%, thereby exerting upward pressure on rates within the T-Bills market. Due to the higher rates, the bills garnered substantial investor interest, resulting in oversubscription, with bids totalling N826 billion against the allotted N487 billion.
Capital Market Review/Outlook (FI and Equities):
- The Eurobonds market witnessed a bullish sentiment, with yield declining over the week across the FGN Bonds, as the Fed Chair Powell emphasized that rates would remain higher “with the question being at what level is appropriate enough to hold at”. Hence, the average benchmark yield increased by 27bps to close at 11.96%
- The Nigerian’s bourse up c. 0.92%, to settle at 70,196.9, while YTD return settled at c. 38.22%. The buying pressure was dominant in the Financial Sector seen in FCMB (+6.25%), STERLINGNG (+1.11%), FIDELITY (+11.24%). The Oil/Gas sector gained +0.09%, while the Consumer Goods sector declined by -0.03%. JAPAULGOLD (+9.6%) led the volume with 113million units, and STANBIC (-0.1%) leads the value chart with #6.77 bn.
Macro Economic Variables
| Equities | This week | Prior week |
|---|---|---|
| S&P 500 | +14.65 | +6.71 |
| NGX ASI | 38.25% | 30.89% |
| Fixed Income | ||
| Overnight | 17.58% | 18% |
| Open Buy Back | 16.58% | 17.00% |
| 1 year T-bill | 14.70% | 11.37% |
| 5-year bond | 15.15% | 14.75% |
| 10-year bond | 15.25% | 15.50% |
| Currency | ||
| FX Reserves ($’bn) | 33.24 | 33.23 |
| USD/NGN | 776.14 | 804.11 |
| Crude Oil (N/$) | ||
| Brent | 81.61 | 88.77 |
Key Economic Variables
| CPI (%) YoY | SEPT-23 | AUG-23 |
| Headline Inflation | 26.72% | 25.80% |
| GDP (%) YoY | Q2 23 | Q1 23 |
| Real GDP | 2.51% | 2.31% |
| Monetary Policy Rate (%) | 18.75% |
Securities Recommendations:
| Security | Rationale |
| AXA Mansard Money Market Fund | The fund is currently at c.9.97% as of 13th November 2023. |
| USD FD | Protects the investor from devaluation of the Naira and exchange rate risk with a return of c.4% – 5% p.a. |
