Key events on the Global Scene:
- US Q3 GDP increased to 4.9% from 2.1% in Q2, driven by increased domestic investment in Residential, Personal Consumption Expenditures and Export of Goods and Services. The US economy continues to show resilience with strong labor market and economic activity ahead of the Fed FOMC Meeting in November.
- The US S&P500 continues its WoW consecutive decline by 277bps despite strong earnings data in the technological sector as market participants focus on cloud computing business segment earnings. However, the rising geopolitical risks and interest rate risks in the bond market still dominates market sentiments.
Key events on the Domestic Scene:
- Nigeria’s stock market post strong earnings data across the financial sector, with the top banks growing their topline revenue QoQ. However, despite strong earnings data, the depreciating naira post worries for the stock market with the Nigerian bourse down c.0.22% WoW.
- The anticipated inflow of $10billion from the concluded court proceedings of the P&ID case is expected to aid the Naira to gain strength against the Dollar towards the end of the year.
Capital Market Review/Outlook (FI and Equities):
- The Nigerian’s bourse down c. 0.22%, to settle at 67,084.00, while YTD return settled at c. 30.89%. The selling pressure was dominate in the Financial Sector seen in STANBIC (-3.21%), FIDELITY (-1.8%). The Oil/Gas sector was unchanged, while the Consumer Goods sector declined by -0.7%. FIDELITY(-1.8%) led the volume with 39.8million units, and NESTLE(+2.9%) leads the value chart with ₦1.74 bn.
- In this week’s N-Tbill auction, rates on the long-end closed higher at 13%, an increase by 400bps compared to previous stop rates at 9.2%. As a result, the FGN bonds market declined with increasing yields on the short end as investors re-allocate holdings in the T-Bills market to take advantage of the yields. Consequently, the average benchmark yield increased by 18 basis points, reaching 14.83%.
- The Eurobonds market witnessed a mixed sentiment, with yield declining over the week across the FGN Bonds, due to anticipated $10bn inflow. Hence, the average benchmark yield decline to close at 12.01% by 78bps from 12.79% last week.
Macro Economic Variables
| Equities | This week | Prior week |
|---|---|---|
| S&P 500 | +6.71 | +10.76 |
| NGX ASI | 30.89% | 30.92% |
| Fixed Income | ||
| Overnight | 18% | 1.50% |
| Open Buy Back | 17% | 0.92% |
| 1 year T-bill | 11.37% | 9.12% |
| 5-year bond | 14.75% | 13.23% |
| 10-year bond | 15.50% | 15.10% |
| Currency | ||
| FX Reserves ($’bn) | 33.31 | 33.24 |
| USD/NGN | 804.11 | 782.68 |
| Crude Oil (N/$) | ||
| Brent | 88.77 | 90.54 |
Key Economic Variables
| CPI (%) YoY | AUG-23 | JUL-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.8.69% p.a as at 26th October, 2023. |
| USD FD | Protects the investor from devaluation of the Naira and exchange rate risk with a return of c.4% – 5%p.a |
