Nigerian Bourse Shed 0.10%w/w, As Headline Inflation Tapers Further to 17.38%

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GLOBAL MARKET

Global Stocks See Red, Amid Covid-19 Delta Variant Concern

This week, the bears dominated all of the fourteen global market indices under our coverageGLOBAL MARKET 20082021. The negative performance was on the back of growing concern of rising cases of coronavirus infections and fears that a taper in China’s growth could disturb the global economic recovery.

All the major U.S indices under our coverage, DJIA Index, S&P 500 Index and Nasdaq Composite  Index declined by 1.11w/w, 0.59%w/w, and 0.73%w/w respectively. As fears that the Federal Reserve might change the monetary policy rate later this year dampen investors’ appetite for stocks.

Similarly, all the major indices under our coverage in Europe; the France CAC 40, UK FTSE 100, and the German DAX Index decreased by 3.91%w/w,  1.81%w/w, and 1.06%w/w respectively.

Also, all the major indices under our coverage in Asia, the Japan Nikkie 225, Hong kong HANG SENG, China Shanghai Composite, and India S&P BSE Index depreciated by 3.45%w/w, 7.73%w/w, 2.53%w/w, and 0.19%w/w respectively, as a result of the raging Delta variants of the COVID 19 Pandemic and travel restrictions in some part of the region.

Furthermore, all the major indices in the emerging markets under our coverage, South Africa FTSE/JSE, Egypt EGX 30, Argentina Merval Index, and Brazil Bovespa Index declined by 4.86%w/w, 0.70%w/w, 2.48%w/w, and 2.59%w/w respectively.

In the coming week, we expect mixed sentiment, as investors react to the outcome of the Federal Reserve meeting, which signaled that the monetary rates may change later this year, despite concerns about soaring cases of the Delta Variant Covid-19 around the globe.

DOMESTIC ECONOMY

Nigeria Inflation Slides to 17.38% For The Fourth Consecutive Month

Inflation TrendThe Nigeria Bureau of Statistics (NBS) released the Consumer Price Index (CPI) for July 2021 on 18th Wednesday, 2021. From the released data, the headline inflation (a measure of the average change in the general price level of goods and services in the economy) declined for the fourth consecutive month to print at 17.38% year-on-year, from 17.75% in June 2021, denoting a contraction of 37 basis point when compared to last month. Similarly, on a month-on-month basis, the inflation rate slowed down by 13 basis points from 1.06% in June 2021 to 0.93% in July 2021.

The downtick in the headline inflation was majorly a result of a decrease in the Food Price Inflation (a sub-component of the headline index) by 80 basis points to 21.03% y/y in July 2021 from 21.83% in June 2021, overshadowing the impact of the increase in the Core Inflation Index (non-food price index) by 63 basis points to 13.72% in July 2021 from 13.09% in June 2021. On a month-on-month basis, the food inflation rate was reduced by 25 basis points to 0.86% in July 2021 from 1.11% the previous month while the core inflation rate rose by 50 basis points to 1.31% in July 2021 when compared to 0.81% in June 2021.Inflation MM

Also, the year-on-year urban inflation declined by 25 basis points to post 18.01% for July 2021 as against 18.35% for June 2021. Likewise, on monthly basis, the urban inflation declined to 0.98% in July 2021 from 1.09% in June 2021 by 11 basis points.

Similarly, the year-on-year rural inflation dropped by 41 basis points to settle at 16.75% in July 2021, when compared to 17.16% posted in June 2021. On the same note, the month-on-month rural inflation rate, decrease to 0.87% in July 2021 from 1.02% in June 2021.

In conclusion, despite the tapering in the rise of inflation due to BASE EFFECT, Prices of food and non-food items continue to rise as a result of exchange rates, poor infrastructures, insecurity caused by insistent farmer-herder crises, banditry amongst other macro-economic factors.

 

 

EQUITY MARKET

NGX

Local Bourse Halts Two Weeks bullish Run, as NGX-ASI Dips by 0.10%.GAINERS 200820201 1

The Nigerian equity market closed w/w transactions on a bearish note, reversing the gains recorded the previous week, as the NGX-ASI depreciated by 0.10% from 39,522.34  points to close at 39,483.08 points. Negative market performance was recorded in three (3) of the five (5) trading sessions.

Investors lost about N20.45 billion, as the Market Capitalization. declined from N20.59 trillion in the previous week to N20.57 trillion.

At the end of the week, out of the five NGX indices under our coverage, only the Industrial Index emerged as the best performer with a w/w gain of +1.85%, while negative performances were recorded in the remaining indices namely: Consumer Goods Index (-6.31%), Insurance Index (-0.96%), Banking Index (-0.82%), and Oil&Gas Index (-0.61%).

According to the NGX Weekly Summary Report, HONYFLOUR emerged as the best performing stock for the week with a w/w gain of +46.34%, while MEYER emerged as the worst-performing stock with a w/w loss of -66.10%.

A total of 867 million shares worth N12.257 billion in 17,290 deals were traded this week by investors of the Nigerian Exchange Group (NGX), as against a total ofLOSER 20082021 1 1.61 billion shares worth N12.59 billion in 18,622 deals last week.

Twenty-one (21) equities appreciated at price during the week, lower than Twenty-nine (29) equities in the previous week. Fifteen (15) equities depreciated in price, lower than Twenty-nine (29) equities in the previous week, while One-hundred and twenty (120) equities remained unchanged, as against ninety-eight (98) equities recorded in the previous week.

 

Outlook

We expect mixed sentiment next week as bargain hunters take advantage of recently depreciated stock prices, and investors also take profits from the appreciated ones. Furthermore, movement in the fixed income market will also influence market sentiment next week

NASD OTC

NASD OTC Extend Bearish Run by 1.25% to Two Consecutive Week 

Transactions on the NASD OTC Security Exchange Market closed on a bearish note to extend the previous week’s negative sentiment, as the NASD Security Index NSI declined by 1.25%, representing 9.29 basis points to close at  736.07 points against 745.36 points in the previous week. Investors lost N8.08 billion for the week, as the NASD OTC Market Capitalisation closed at N639.77 billion for the week.NASD OTC 20082021

Total trading activity for the week was valued at N201.73 million in 99 deals, against N264.29 million in 99 deals recorded in the previous week. The most traded stocks on the exchange for the week are; SDNGXGROUP, SDCSCSPLC, SDFCWAMCO, SDNDEP, and SDFOODCPT.

Outlook

We expect the NASD OTC Market to trade in a tight range in the coming week.

Money MarketSYSTEM LIQUIDITY INDICATOR 20082021 1

The system liquidity indicators closed higher, as Overnight (O/N) and Open Buy Back (OBB) rates appreciated to 23.83% and 23.33% respectively, from 17.25% and 16.75% in the previous week.

 

FOREIGN EXCHANGE 20082021 1Foreign Exchange Market

At the I&E FX window, the Naira depreciated by 0.22%(w/w) to close on Friday (20/08/2021) at ₦411.71/USD against ₦410.80/USD from last Friday’s position. Also, at the BDC, Naira depreciated by 0.78%(w/w) to close on Friday (20/08/2021) at ₦517/USD against ₦513/USD from last Friday’s position.

FOREIGN RESERVE 20082021 1

Foreign Reserve

The Foreign Reserve declined $63.11 million to the level of $33.52 billion (19/08/2021) from $33.58 billion (13/08/2021).

 

CRUDE OIL 20082021 1 Crude Oil

The Brent Crude price depreciated by $5.41/barrel (w/w) to $65.18/barrel this Friday(20/08/2021) as against $70.59/barrel last Friday (13/08/2021), representing a drop of 9.21% (w/w). Similarly, Nigeria’s Bonny Light also decreased by $5.05 to $64.71/barrel on Friday (20/08/2021) from $69.76/barrel (13/08/2021), representing a drop of 7.24% (w/w)

 

Source: GTI Research

GTI

GTI is a leading Nigerian Investment Banking group with proven expertise in Financial advisory, Securities Dealing (Fixed Income and Equities), Asset management and Deal Origination. We have strong capacity in financial service delivery.

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