Macroeconomic Review
Nigeria’s inflation – About time for “law of gravity”?
After the sustained increase in Nigeria’s inflation for the most part of 2022, Dec’2022 inflation turned out to be an outlier, as the National Bureau of Statistics reported a slight decline. According to the National Bureau of Statistics, Nigeria’s headline inflation fell by some 0.13% to 21.34%, year-on-year, from the preceding month….
Nigeria’s Monetary Policy Review – MPC maintained a hawkish stance despite the drop in headline inflation.
In Jan’2023, the Nigeria’s Monetary Policy Committee had its first monetary policy meeting, where a hold stance or at best, a 50bps increase in benchmark interest was envisaged, given the fact that December’s inflation slowed to 21.34% (13bps drop from Nov 2022 figure) and global central banks lowered the magnitude of rate hike in Dec 2022 (US Fed increased the benchmark interest rate by 50bps at its December meeting)….
Fixed Income Market Review and Outlook
Divergent trends ensued in the local fixed income space, as buyside interest was seen across short-dated papers (treasury bills, OMO, CBN Special bills, Promissory notes, less than 3 years FGN bonds) mostly by banks and fund managers, while a mixed to bearish theme was witnessed in the FGN bonds market amid increased supply by the DMO……
Money Market Review and Outlook– Buoyant system liquidity and lower interbank rates despite the increased MPR
System liquidity remained elevated in the first month of 2023 due to significant inflows from bond coupons, FAAC credits, CBN Special bills and swap maturities. Although, the CBN conducted its discretionary mop-up exercises during the month using the CRR and Retail SMIS….
T-Bills Market Review and Outlook – Low rates across the curve amid elevated system liquidity and aggressive buying
The overall theme for the treasury bills market at the start of 2023 was bullish. Banks and fund managers scrambled to reinvest their idle cash in available short-dated instruments to avoid having their funds mopped up at 0% by the CBN and for statutory/regulatory reasons, respectively…..
FGN Bonds Market Review and Outlook – Q1 2023 FGN bond issuance calendar set the pace for a mixed to bearish theme.
The highlight of Jan 2023 FGN bonds activity was the release of Q1 2023 FGN bonds issuance calendar, where between ₦320bn and ₦400bn is expected to be borrowed from the domestic market across 4 bond maturities (2028s, 2032s, 2037s and 2049s) every month.
Eurobond Market – Mixed to bearish theme amid lower sovereign ratings, hawkish US Feds, inflation and strong growth data
Positive equities opening ensured most of the notable Sub-Saharan African, Middle East and North African papers witnessed a bullish theme to start the year. It was basically one-way across Nigeria, Angola and Egypt; however Ghana witnessed a somewhat bearish affair amid the ongoing debt restructuring talks…..
Foreign Exchange Market Review and Outlook – FX reserves decline further; Naira held steady against the dollar at the I&E window.
Activity in the FX market was quite slow to start the year with minimal volatility observed at both the official and unofficial markets, amid trifling intervention by the CBN through the bi-weekly Retail SMIS amongst others. The exchange rate closed the month at an official rate of ₦461.5/$1 (same as Dec 2022 close) at the Investor and Exporter (I&E) window with NAFEX closing at ₦461.3/$1.
Equities Market Performance in January– Capital Gains for Nigerian stocks despite election concerns
The Nigerian stock market closed the first month of the year on a bullish note, as the All-share Index (ASI) advanced by 3.88% (c. 1,987.61bps) since the start of the year to 53,238.67 points. In the same vein, Market Capitalization which opened the trading year at N27.92 trillion, appreciated by N 1.08 trillion to close the month at N28.99 trillion.
