Macroeconomic Review
Nigeria’s Gross Domestic Product – Lower than expected growth numbers
Nigeria’s Q1 2023 Gross Domestic Product (GDP) grew by 2.31% Y-o-Y, lower than the 2.85% estimate. Although, the growth rate was lower than 3.52% in Q4’2022 and 3.11% in Q1’2022, the real GDP growth rate also implied that the Q1’2023 GDP surpassed Q1’2022 value at N17.750 trillion. The Q1 2023 growth rate decreased by 0.80% (2.31%: Q1 2023 vs 3.11%: Q1 2022) and declined by 1.21% relative to 3.52% in Q4 2022…
Nigeria’s Inflation – No Case for a Pullback
Nigeria’s inflation for April 2023 increased to 22.22% Y-o-Y (Est. +22.10%), an increase of c.0.18% from 22.04% Y-o-Y recorded in March 2023. Again, the headline inflation pushed higher at 1.91% M-o-M in April 2023 vs 1.86% recorded in March 2023. Likewise, food and core inflation numbers jumped to 24.61% and 20.14% respectively, from 24.45% and 19.86% recorded in March 2023. On a monthly basis, the headline index grew by 1.91% in April (vs 1.86% in March). The core index grew by 1.46% M-o-M in April vs. 1.84% in March, while the food sub-index grew by 2.13% M-o-M compared to 2.07% in March…
Nigeria’s Interest Rate Decision – Another rate hike; No end in sight yet
At the last MPR meeting, the CBN governor, Godwin Emefiele, noted that the rate hike which began last year in May 2022 has kept inflation in check, as the hawkish policy has moderated inflation considerably (c.800bps). He also mentioned that according to research conducted by the committee, it was observed that inflation would have risen to about 30.48% YoY in April 2023 if the interest rate was not raised to address the surging inflation…
Fixed Income Market Review and Outlook
At the start of the month, there was mixed to bearish sentiment in the treasury bills market as investors sold off holdings after April 2023’s last Retail SMIS auction & CRR debit. Thereafter, renewed buying activity at the long end of the curve led to a decline in rates driven by CBN Swap maturities and other credits…
Money Market Review and Outlook – Improved system liquidity amid mild debits, swap maturities and FAAC credits
It was a relatively liquid month in May, significantly better than the previous month, as buoyant liquidity periods were observed. Though, there were liquidity crunch moments, which were fueled by the bi-weekly Retail SMIS auction, the FGN bond auction and mild CRR debits. as buoyant liquidity periods sandwiched a momentary sparseness/liquidity crunch which was fueled by the bi-weekly Retail SMIS auction, the FGN bond auction and the mild CRR debits…
T-Bills Market Review and Outlook – Inflow of CBN swap maturities and statutory credits drove buyside activity despite early bearish pressures
In the early part of the month, there was a mixed to bearish market sentiment as investors sold off holdings after the April 2023 Retail SMIS auction & CRR debit. Selling was mainly focused on the short end of the curve to minimize losses, suggesting a potential increase in yield levels…
FGN Bonds Market Review and Outlook – Mixed to bullish sentiments; 2032, 2042 and 2050 papers retired at the auction.
In the local bonds market, the month began bearish as market players offered on-the-run papers (2028s, 2032s, 2042s and 2050s) with limited demand from traditional buyside players. Offers increased to stimulate trades, which resulted in some hits on market bids, as short positions were opened with the expectation to cover at the auction…
Eurobond Market – Buyside activity dominated proceedings; fuel subsidy removal talks
The markets shrugged off the initial weakness caused by the uptick in April’s Eurozone inflation (inched upwards to 7.00% from 6.90%), as the much anticipated 25bps hike played out at May’s FOMC meeting, causing a bullish theme across Nigeria, Angola and Egypt papers. The markets waved off the prospect that Fed Chair Powell might have one more hike in his radar, instead they stacked up bets that the US central bank’s next move will be to cut its benchmark interest rate…
Foreign Exchange Market Review and Outlook – Gross FX reserves decline further; Naira extends its loss against the dollar at the I&E Window
Cash trades at the unofficial window traded mostly between $/₦735 – $/₦740, while Inflows closed at $/₦745 (after hitting a peak of $/₦780). However, at the official window, NAFEX rate closed at $/₦465.32 in May’2023, representing a ₦2.62k depreciation when compared with previous month’s close of $/₦462.70, while there was a ₦1.67k depreciation at the I&E window, as it closed at $/₦464.67…
Equities Market Performance in May – Investors gained ₦1.83 trillion as Nigerian Stocks posted the highest return In Sub-Saharan Africa
Activity in Nigerian equity market dwindled further in the early period of May, suggesting late profit taking by some participants. Observably, selling interest persisted in some bellwether stocks, particularly AIRTELAFRI, shedding over 6.00% in mid-May. Amongst other big names in the Banking Sector, WEMABANK trended downwards by roughly 2% in the same period…
