Global Economy
Eurostat published the EU’s Q3 GDP for 2023 earlier this week. The data indicates that, in comparison to Q2:2023, seasonally adjusted GDP in the euro area fell by 0.1% QoQ in Q3:2023 and stayed steady in the EU. The GDP of the EU and the euro area grew by 0.1% QoQ in Q2:2023. The countries with the most GDP growth from Q2:2023 to Q3:2023 were Malta (+2.4% QoQ), Poland (+1.5% QoQ), and Cyprus (+1.1% QoQ). Ireland (-1.9% QoQ), Estonia (-1.3% QoQ), and Finland (-0.9% QoQ) saw the biggest declines. In contrast, the GDP of the United States grew by 1.3% QoQ in Q3:2023 as opposed to +0.5% QoQ in Q2:2023. Also, United States’ GDP rose by 3.0% YoY in Q3:2023 (vs. +2.4% YoY in Q2:2023). On a separate note, in the US, Private sector employment increased by 103,000 jobs in November 2023 and annual pay was up 5.6% YoY, according to the November ADP National Employment Report. According to the report, Job-stayers saw a 5.6% pay increase in November 2023, the slowest pace of gains since September 2021. Job-changers, too, saw slowing pay growth, posting pay gains of 8.3%, the smallest YoY increase since June 2021.
Domestic Economy
Earlier this week, the National Bureau of Statistics (NBS) published its Q3:2023 Foreign Trade in Goods report, revealing a substantial 54.62% QoQ increase in Total Trade to NGN18.80trn, (vs. NGN12.16trn in Q2:2023). This upswing is attributed to corresponding rises in Total Imports (+47.70% QoQ to NGN8.46trn in Q3:2023 from NGN5.73trn in Q2:2023) and Total Exports (+60.78% QoQ to NGN10.35trn in Q3:2023 from NGN6.44trn in Q2:2023). On Year-on-Year (YoY) basis, Total Trade rebounded from its 11.81% decline in Q2:2023, experiencing a significant 53.16% YoY growth in Q3:2023 (vs. NGN12.28trn in Q3:2022). Notably, both Total Imports and Total Exports registered 33.33% YoY and 74.36% YoY increases in Q3:2023. Furthermore, Nigeria’s Balance of Trade maintained a surplus for the fourth consecutive quarter, demonstrating an impressive 166.47% QoQ growth to NGN1.89trn in Q3:2023, (vs. NGN708.88bn in Q2:2023). In addition, Nigeria Inter-Bank Settlement System (NIBSS) has mandated banks to eliminate non-deposit payment service providers from instant payment (NIP) outward transfer channels. The directive is aimed at resolving regulatory concerns associated with non-deposit-taking financial institutions (NDTFIs) handling customer funds. The circular specifically directs banks to remove all institutions falling into these categories from their NIP outward transfer channels, clarifying that this limitation does not extend to inward transfers.
Equities and stock recommendation
This week, the Nigerian Equities market closed bullish as the NGX All Share Index (ASI) added 17bps WoW to settle at 71,541.74 points. This represents the fifth (5th) consecutive week of positive returns in the Nigerian bourse. Consequently, the market’s year-to-date (YtD) returns moved up to 39.59% from 39.35% last week. This week, only the Banking (+6.08% WoW) and Consumer Goods (+0.21% WoW) sectors closed the week on a bullish note while the Industrial Goods (-3.03% WoW), Insurance (-1.44% WoW) and Oil and Gas (-0.58% WoW) sectors lost gains. Overall, MULTIVERSE (+57.0% WoW to NGN9.39), ETI (+21.3% WoW to NGN20.75) and AIICO (+17.2% WoW to NGN0.75) topped the gainers’ chart while OANDO (-12.3% WoW to NGN10.35), ABBEYBDS (-10.5% WoW to NGN1.54) and MRS (-10.00% WoW to NGN99.00) were the top losers for the week. In the coming week, we expect bullish sentiments to persist in the market as investors hunt for tickers with strong fundamentals.
Fixed Income
At the primary NTB auction held this week, the average stop rate went up by 33bps to 12.58% (vs 12.25% at the previous auction). Similarly, the average bid-to-cover ratio surged by 11.08% to settle at 16.90% (vs 5.82% at the previous auction), indicating an increase in demand. Notably, the 91 (+12.75% to 14.01x), 182 (+8.33% to 13.86x) and 364 (+10.94% to 16.99x) day bill instruments all registered high demand. The Nigerian Treasury Bills market closed the week bearish as average yield increased by 51bps WoW to settle at 11.01%. Conversely, the FGN bond market closed bullish as the average yield declined by 84bps WoW to 14.86%. This is alluded of buying interest across all ends of the curve. Overall, the Naira Fixed income market closed bullish as the average yield dipped by 16bps WoW to settle at 12.93%. We expect bearish sentiment in the coming week, driven by tighter liquidity in the system.
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