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Global Economy

Earlier this week, according to the US Bureau of Economic Analysis, the US Real Gross Domestic Product increased at a rate of 5.2% YoY in Q3:2023, according to its revised estimates. The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, government spending, residential fixed investment, and nonresidential fixed investment. This was partially offset by an increase in Imports. Nominal GDP increased by 8.9% YoY, or $581.5 billion, in Q3:2023 to $27.64 trillion, an upward revision of $20.9 billion from the previous estimate. Elsewhere, in China, according to its National Bureau of Statistics, the Purchasing Manager Index (PMI) of China’s manufacturing industry was 49.4%, a decrease of 0.1% from the previous month, and the climate level of the manufacturing industry slightly fell. In November 2023, the non-manufacturing business activity index was 50.2%, a decrease of 0.4% from the previous month, still higher than the threshold, indicating that the non-manufacturing industry maintained expansion. 

Domestic Economy

During the week, President Bola Tinubu presented the 2024 appropriation bill, which he referred to it as the ‘Budget of Renewed Hope.’ The approved budget stands at NGN27.5trn, with a targeted revenue growth of NGN18.32trn and a projected budget deficit of NGNG9.18trn, as approved by the Federal Executive Council on Monday. Tinubu, in his presentation to the National Assembly, expressed optimism about a robust 3.76% economic growth in the 2024 fiscal year. Breaking down the budget, the recurrent expenditure is earmarked at NGN9.92trn, reflecting the costs associated with day-to-day operations. On the other hand, the capital expenditure is allocated at NGN8.7trn, emphasizing investments in infrastructure, development projects, and other long-term initiatives. This detailed budgetary breakdown provides insight into the financial priorities and strategies outlined by President Tinubu for the upcoming fiscal year. Furthermore, Following OPEC’s 36th Ministerial meeting , Nigeria’s production quota has been increased from the initial June 2023 proposal of 1.38mn barrels per day. Despite this adjustment, Nigeria’s 2024 oil production quota remains below the 1.78mn barrels per day estimated for 2024, signaling a disparity in production expectations.

Equities and stock recommendation

The Nigerian Equities market extended its positive run for the fourth (4th) consecutive week, as the NGX All Share Index (ASI) went up by 27bps to 71,419.87 points, lifting the market’s year-to-date (YtD) returns to 39.35% from last week’s 38.98%. The Oil and Gas (+5.97% WoW) and Banking (+1.92% WoW) sectors gained the highest this week while the Insurance (-2.03% WoW), Industrial Goods (-1.23% WoW) and Consumer Goods (-0.47% WoW) sectors closed in the red. The top gainers for the week include NNFM (+24.8% WoW to NGN36.00), NSLTECH (+16.4% WoW to NGN0.64) and SUNUASSUR (+11.5% WoW to NGN1.26) while OMATEK (-21.2% WoW to NGN0.78), GUINEAINS (-20.6% WoW to NGN0.27) and DAARCOMM (-20.5% WoW to NGN0.31) were the top losers for the week. In the coming week, we expect investors to bargain-hunt for tickers with strong fundamentals in sectors such as Banking and Oil and Gas. 

Fixed Income

This week, the Nigerian secondary Treasury Bills market closed the week flat as average yield remained unchanged at 10.50%. However, the secondary bond market closed the week on a bullish note as the average yield went down 22bps WoW to settle at 15.69%. This is following Buying interest along the short and long end of the curve. Overall, the Naira Fixed income market closed the week bullish as average yield declined by 11bps WoW to settle at 13.10%. Looking ahead, we anticipate a shift towards bearish sentiment in the coming week. This prediction is based on our expectation of higher interest rates on the short end of the yield curve, compounded by tighter system liquidity.

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