Global Economy
A private Purchasing Manager Index (PMI) survey released earlier this week stated that the Caixin/S&P Global manufacturing PMI increased to 51.8 in June 2024 from 51.7 in May 2024, which was the quickest clip since May 2021. For eight months running, the index—which primarily includes smaller, export-focused businesses—has been above the 50-point threshold that divides expansion from contraction. According to the Caixin PMI survey, June 2024 saw a two-year high in manufacturing output growth. The number is at odds with previously released government PMI statistics, which indicated that China’s manufacturing sector contracted in June 2024 for a second straight month. At 49.5 in June 2024, the Chinese National Bureau of Statistics (NBS) PMI remained constant from May 2024. A PMI score of less than 50 points denotes contraction, and above 50 represents an expansion. However, the Caixin data is different from the official survey, particularly regarding the range of enterprises that are included. While the official survey concentrates more on larger, state-run firms in the north, the Caixin survey covers smaller, private businesses in southern China. Compared to the official reading, the Caixin PMI additionally includes a smaller subset of Chinese enterprises. Moreover, in Europe, seasonally adjusted retail trade volume rose by 0.1% MoM in the EU and the euro area in May 2024 compared to April 2024, according to preliminary data from Eurostat. Retail trade volume decreased by 0.2% MoM across the EU and the euro region in April 2024.
Domestic Economy
Earlier this week, the National Bureau of Statistics (NBS) published the Q1:2024 capital importation report, revealing a 198.06%YoY increase to USD3.37bn, compared to USD 1.13bn in Q1:2023. This growth is driven by significant increases in Foreign Direct Investment (+150.35% YoY to USD 119.18mn), Foreign Portfolio Investment (+219.67% YoY to USD 2.07mn), and other investments (+171.08% YoY to USD 171bn). On a Quarter on quarter (QoQ) basis, total capital importation surged by 210.16%, with FPI growing by 570.05% QoQ and other investments by 93.56% QoQ, though FDI declined by 35.22% QoQ. Our outlook for capital inflow in 2024 remains cautiously optimistic, driven by increasing FDI and strong FPI performance despite ongoing structural challenges. We expect gradual FDI growth aligned with government policies and elevated yields in the Nigerian fixed-income market to attract FPI investors, especially if developed economies begin cutting rates in the second half of 2024.
Equities and stock recommendation
This week, the Nigerian equities market relapsed into negative territory, as the NGX all Share Index (NGX ASI) shed 4bps WoW to settle at 100,022.03 points. This is on the back of losses incurred in the Consumer Goods sector (-0.69% WoW), following negative sentiment in DANGSUGAR (-5.81% WoW) and IB (-3.9% WoW). On the other hand, the Banking (+3.87% WoW), Oil and Gas (+3.01% WoW), Insurance (+2.26% WoW) and Industrial Goods (+0.22% WoW) sectors closed positive, spurred on by gains in ZENITH (+5.04% WoW), CONOIL (+20.48% WoW), AIICO (+13.40% WoW) and LAFARGE (+5.73% WoW) respectively. Topping the gainers’ chart this week were CONOIL (+20.5% WoW to NGN126.50), JAIZBANK (+19.5% WoW to NGN2.33) and AIICO (+13.4% WoW to NGN1.10). Conversely, IKEJAHOTEL (-12.0% WoW to NGN6.95), LASACO (-9.8% WoW to NGN2.30) and JBERGER (-9.6% WoW to NGN88.60) led the laggards for the week. In the coming week, we expect investors’ activities in the market to be influenced by the performance of the fixed income market and the anticipation of the release of Q2:2024 earnings results.
Fixed Income
The secondary fixed income market continued its bearish trend this week. The average yield at the Nigerian Treasury bills (NT-bills) market increased by 69bps WoW to close at 22.76%. This is following selloffs on the short- (+2bps) and mid-tenor (+27bps) bills. Likewise, the FGN bond market closed the week bearish as the average yield rose by 2bps WoW to settle at 18.77%. This was driven by selloffs across the yield curve, particularly in the MAR-2025 (+16ps), MAY-2033 (+30bps) and JUN-2053 (+19bps) instruments. This bearish trend is expected to persist next week, on the back of a restrictive policy environment.
Click here for full report
Weekly Commentary and Stock Recommendation: 1st July – 5th July 2024
Global Economy
A private Purchasing Manager Index (PMI) survey released earlier this week stated that the Caixin/S&P Global manufacturing PMI increased to 51.8 in June 2024 from 51.7 in May 2024, which was the quickest clip since May 2021. For eight months running, the index—which primarily includes smaller, export-focused businesses—has been above the 50-point threshold that divides expansion from contraction. According to the Caixin PMI survey, June 2024 saw a two-year high in manufacturing output growth. The number is at odds with previously released government PMI statistics, which indicated that China’s manufacturing sector contracted in June 2024 for a second straight month. At 49.5 in June 2024, the Chinese National Bureau of Statistics (NBS) PMI remained constant from May 2024. A PMI score of less than 50 points denotes contraction, and above 50 represents an expansion. However, the Caixin data is different from the official survey, particularly regarding the range of enterprises that are included. While the official survey concentrates more on larger, state-run firms in the north, the Caixin survey covers smaller, private businesses in southern China. Compared to the official reading, the Caixin PMI additionally includes a smaller subset of Chinese enterprises. Moreover, in Europe, seasonally adjusted retail trade volume rose by 0.1% MoM in the EU and the euro area in May 2024 compared to April 2024, according to preliminary data from Eurostat. Retail trade volume decreased by 0.2% MoM across the EU and the euro region in April 2024.
Domestic Economy
Earlier this week, the National Bureau of Statistics (NBS) published the Q1:2024 capital importation report, revealing a 198.06%YoY increase to USD3.37bn, compared to USD 1.13bn in Q1:2023. This growth is driven by significant increases in Foreign Direct Investment (+150.35% YoY to USD 119.18mn), Foreign Portfolio Investment (+219.67% YoY to USD 2.07mn), and other investments (+171.08% YoY to USD 171bn). On a Quarter on quarter (QoQ) basis, total capital importation surged by 210.16%, with FPI growing by 570.05% QoQ and other investments by 93.56% QoQ, though FDI declined by 35.22% QoQ. Our outlook for capital inflow in 2024 remains cautiously optimistic, driven by increasing FDI and strong FPI performance despite ongoing structural challenges. We expect gradual FDI growth aligned with government policies and elevated yields in the Nigerian fixed-income market to attract FPI investors, especially if developed economies begin cutting rates in the second half of 2024.
Equities and stock recommendation
This week, the Nigerian equities market relapsed into negative territory, as the NGX all Share Index (NGX ASI) shed 4bps WoW to settle at 100,022.03 points. This is on the back of losses incurred in the Consumer Goods sector (-0.69% WoW), following negative sentiment in DANGSUGAR (-5.81% WoW) and IB (-3.9% WoW). On the other hand, the Banking (+3.87% WoW), Oil and Gas (+3.01% WoW), Insurance (+2.26% WoW) and Industrial Goods (+0.22% WoW) sectors closed positive, spurred on by gains in ZENITH (+5.04% WoW), CONOIL (+20.48% WoW), AIICO (+13.40% WoW) and LAFARGE (+5.73% WoW) respectively. Topping the gainers’ chart this week were CONOIL (+20.5% WoW to NGN126.50), JAIZBANK (+19.5% WoW to NGN2.33) and AIICO (+13.4% WoW to NGN1.10). Conversely, IKEJAHOTEL (-12.0% WoW to NGN6.95), LASACO (-9.8% WoW to NGN2.30) and JBERGER (-9.6% WoW to NGN88.60) led the laggards for the week. In the coming week, we expect investors’ activities in the market to be influenced by the performance of the fixed income market and the anticipation of the release of Q2:2024 earnings results.
Fixed Income
The secondary fixed income market continued its bearish trend this week. The average yield at the Nigerian Treasury bills (NT-bills) market increased by 69bps WoW to close at 22.76%. This is following selloffs on the short- (+2bps) and mid-tenor (+27bps) bills. Likewise, the FGN bond market closed the week bearish as the average yield rose by 2bps WoW to settle at 18.77%. This was driven by selloffs across the yield curve, particularly in the MAR-2025 (+16ps), MAY-2033 (+30bps) and JUN-2053 (+19bps) instruments. This bearish trend is expected to persist next week, on the back of a restrictive policy environment.
Click here for full report
Latest News
Daily Market Update|10-10-2024
Daily Market Update|09-10-2024
Daily Market Update|08-10-2024
ACCESSCORP | Banking | H1:2024 Earnings Note | Higher Cost of Fund Limits Bottomline
Subscribe
Get a prompt weekly email from our professional team on market insights, investing strategy and valuable tips for your finances!