EUR 4.00 For Business Accounts Only

Weekly Economic & Financial Commentary - February 04 - 08, 2019

Global Economy 

• This week, the U.S Commerce Department released the international trade in goods and services numbers for November 2018, which showed that the US trade deficit narrowed for the first time in five months to $49.3 billion from an upwardly revised $55.7 billion in October, following faster decline in imports relative to exports. Notably, imports moderated by 2.9% MoM to $259.19 billion following slump in petroleum products and consumer goods, while exports (-0.6% MoM to $209.9 billion) was weighed down by tamer industrial supplies. In the Eurozone, producer prices declined further in December by 0.8% from the previous month, owing to lower energy prices which dropped 2.6% MoM. However, on an annual basis, the Producer Price Index expanded 3% YoY, lower than the 4% YoY recorded in November. 

Domestic Economy

• This week, the Nigerian National Petroleum Corporation (NNPC) released its financials for the period covering January to November 2018 which showed an operating profit of N69.5 billion compared to a loss of N75.6 billion same period in 2017. Going by the numbers, we believe the NNPC could post the first annual profit since the group began publishing its accounts in 2015. The improvement largely stemmed from surplus in its upstream operations which reflects higher crude oil prices and production over the period as well as lower losses on its downstream operations which more than outweighed the sluggish performance in its midstream activities, which rose 2x the loss reported in the prior year to N70.1 billion.

Equities

• The Nigerian bourse closed the week positive as the NSE ASI appreciated by 2.92% WoW to close at 31,529.92 points, with the market capitalization gaining N333.6 billion. The bullish sentiments were spurred by gains in most sectors – Banking (+7.63%), Brewers (+3.68%), Personal care (+1.86%), Food (+5.10%), Insurance (+0.67%), Oil & Gas (+0.19%) and Real Estate (+0.22%). Dissecting the sector performance, gains were driven by interest across bellwether stocks (FBNH: +8.84%, GUARANTY: +14.69%, ZENITH: +6.32%, NB: +5.41%, NESTLE: +5.63%, AIICO: +12.50% and MANSARD: +4.64%) across sectors.

Fixed Income

• Yields in the fixed income market dipped 11bps WoW to 14.62% largely driven by contraction in the long end yields. Despite series of OMO issuances this week (Total OMO sale: N643.19 billion) NTB yields inched slightly higher by 1bp as buy pressure prevailed in the market. At the long end, average yields contracted 21bps WoW to 14.65%, following investor interest in the FGN 2021 (-49 bps), FGN 2037 (-49 bps) and FGN 2036 (-46 bps) bonds. 

 Chart of the Week

• This week, we feature monthly inflows (ex CBN) and outflows on the Investor and Exporters Window (IEW) which showed improved activities in January following capital repatriation and paucity of flows in previous months. Consequently, the higher FPI inflow amidst a slower increase in outflows resulted in lower intervention sales by the CBN during the month. See chart for details.