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Global Economy

China’s private Caixin Manufacturing Purchasing Managers’ Index (PMI) reached 50.8 in December 2023, its highest level in four months, earlier this week, suggesting a steady rebound in the country’s medium- and small-sized firms. According to the report, firms experienced a more robust rise in output and new orders from the market. The fastest gain in overall sales since February 2023 occurred in December 2023, and the most recent boost in new production was bolstered by favorable market circumstances and strong customer spending. In December 2023, the decline in new export business also subsided, with the marginal rate of decline being the lowest in six months. In other news, German MoM retail sales for November 2023 dropped from 1.1% in October 2023 to -2.5%. This was the worst decline since April 2022, primarily due to a 2.8% decline in mail order and online sales. Sales of non-food items decreased by 3.6%, while sales of food items decreased by 0.5%. Sales of leather goods, shoes, textiles, and apparel did, however, increase by 2%. November 2023 YoY retail sales decreased by -2.4% from October 2023 YoY retail sales of -0.1%. As of November 2023, retail activity had decreased 3.3% year over year.

Domestic Economy

Earlier this week, the National Bureau of Statistics released its Capital Importation data for the Q3:2023. On a YoY basis, the total amount of Capital Imported witnessed a substantial decline of 43.55%, dropping to USD654.65 million in Q3:2023 from the USD1.16bn recorded in Q3:2022. This decline is notably evident in two major components: Foreign Direct Investment, which decreased by 26.86%YoY to USD59.77mn, and Foreign Portfolio Investment, which experienced an 80.30%YoY decrease to USD87.11mn. Additionally, the Nigerian National Petroleum Company (NNPC) Ltd. has reassured the public that there are no immediate plans to raise the petrol price, they have dispelled baseless rumors and emphasized to Nigerians that there are no intentions to hike the price of Premium Motor Spirit (PMS), the public is encouraged not to engage in panic buying, as there is currently an abundant supply of PMS nationwide.

Equities and stock recommendation

The Nigerian Equities market sustained its bullish run from last year and began 2024 on a strong foot, as the NGX All Share Index advanced by 654bps WoW to 79,664.66 points (Market YtD:6.54%). The Insurance (+14.08% WoW), Banking (+10.23% WoW), Consumer Goods (+4.40% WoW), Industrial Goods (+3.58% WoW) and Oil and Gas (+3.00% WoW) sectors all started the year in the green zone.  This week, IKEJAHOTEL (+46.2% WoW to NGN8.77), AIICO (+43.8% WoW to NGN1.15) and DAARCOMM (+43.3% WoW to NGN1.29) gained the highest while CILEASING (-39.6% WoW to NGN3.38), SCOA (-11.7% WoW to NGN1.63) and CHAMPION (-11.8% to NGN3.66) lost the most in the first trading week of 2024. In the coming week, we expect buying interest to persist in the market as investors try to position themselves in high dividend-paying tickers ahead of the release of 2023FY earnings report.

Fixed Income

The Nigerian Treasury Bills market closed the week bullish as the average yield dipped by 34bps WoW to 5.95%. Similarly, the FGN Bond market concluded positively as the average yield went down by 33bps WoW to close at 13.81%. This is on the back of buying interest across the yield curve. Overall, the Naira Fixed Income market closed the week on a bullish note as the average yield reduced by 33bps WoW to settle at 9.88%. In the coming week, we expect a bullishsentiment to pervade the market barring any CBN interventions.

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