Global Economy
Earlier this week, the Office of National Statistics (ONS) released UK November 2023 Consumer Price Index (CPI) data. According to the ONS, The CPI rose by 3.9% YoY in November 2023, down from 4.6% YoY in October 2023. On a MoM basis, CPI fell by 0.2% in November 2023 (vs. +0.4% MoM in November 2022). The largest downward contributions to the monthly change in CPI annual rates came from transport, recreation and culture, and food and non-alcoholic beverages. Core CPI (excluding energy, food, alcohol, and tobacco) also rose by 5.1% YoY in November 2023, down from 5.7% in October 2023. Elsewhere, in the US, the US Bureau of Labor Statistics (BLS) released the third estimate of US real GDP Q3:2023 data. According to the US BLS, real GDP increased by 4.9% YoY in Q3:2023 (vs. 2.1% YoY in Q2:2023).The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, residential fixed investment, and nonresidential fixed investment. This was partially offset by an increase in Imports. Nominal GDP increased by 8.3% YoY, or USD547.1bn, in Q3:2023 to USD27.61trn, a downward revision of USD34.3bn from the previous estimate.
Domestic Economy
During the week, the National Bureau of Statistics released the unemployment rate for Q2 2023, indicating a 1bp increase to reach 4.2%, (vs 4.1% in Q1 2023). The data also disclosed that the labor force participation rate remained elevated at 80.4% among the working-age population in Q2 2023, accompanied by an employment-to-population ratio of 77.1.The collective rate of unemployment and time-related underemployment, as a proportion of the labor force population, stood at 15.5% in Q2 2023. Furthermore, the report emphasized that a significant portion of workers, specifically 88.0%, were involved in self-employment, while only 12% held Wage Employment during the same period. In addition, The Federation Account Allocation Committee (FAAC) allocated NGN1.1trn to the three government levels as Federation Allocation In October, sourced from a gross total of N1.62 trn. the combined revenue distributed among the federal, state, and local governments saw a 20.04% increase, reaching NGN1.08 trn. This marks a significant climb from the NGN906.96 bn disbursed in the previous month.
Equities and stock recommendation
The Nigerian Equities market extended its bullish run for the seventh (7th) consecutive week as the NGX All Share Index (ASI) added 226bp WoW to settle at 74,023.27 points, bring the market’s year-to-date returns up to 44.43% YtD (vs. last week: 41.24% YtD). On a sectoral basis, all sectors under our coverage closed positive except the Consumer goods sector (-0.70% WoW). The top gainers for the week were INFINITY (+76.3% WoW to NGN4.53), DAARCOMM (+4.3% WoW to NGN0.69) and MULTIVERSE (+48.6% WoW to NGN13.97) while ABCTRANS (-16.5% WoW to NGN0.76), ETRANZACT (-13.6% WoW to NGN6.05) and ELLAHLAKES (-9.9% WoW to NGN2.90) topped the losers’ chart. As the year draws to a close, we expect the Nigerian bourse to sustain its bullish returns on the back of investors’ bargain-hunting activities.
Fixed Income
The Treasury Bills market closed the week on a bullish note, with the average yield dropping by 17bs WoW to settle at 8.12%. This bullish sentiment extended to the secondary bond market, where the average yield fell by 2bps WoW to settle at 14.36%, driven by buy interest across the yield curve. Overall, the Naira fixed income market ended the week positively, with the average yield declining by 10bps WoW to 11.24%. In the coming week, we opine bullish sentiment due to the improved liquidity in the system.
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