Positive H1’2021 Fiscal Revenues Offer Glimpse of Hope on Nigeria’s Economy

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GLOBAL MARKET

Global Stocks continue to defy the odds against the Covid-19 Delta Variant Outbreak

This week, the bulls sustain dominance, as twelve (12) out of the fourteen global market indices under our coverage advanced, while two (2)global market 1 declined. The continuous positive performance was due to some stellar corporate earnings, amidst continued concerns over the Delta variant of the Coronavirus pandemic, impacting a fledgling economic recovery.

However, the report from the U.S Labour Department on Wednesday shows that Americans pay more for everyday goods and services in July, as the  Consumer Price Index (CPI) rose by 5.4% (Y-o-Y) and 0.50% (Month-on-Month)which could signify that the Fed Reserve might change the monetary policy rate sooner than expected. The Core Inflation, which excludes energy and food, rose by 0.3% last month, and 4.3% last year.

Consequently, all the major U.S indices under our coverage, DJIA Index, and S&P 500 Index increased by 0.87w/w, 0.71%w/w respectively, save for Nasdaq Composite Index that lost marginally by 0.09%w/w.

Similarly, all the major indices under our coverage in Europe; the France CAC 40 and UK FTSE 100, and the German DAX Index advanced by 1.16%w/w,  1.34%w/w, and 1.37%w/w respectively, as investors grow confident in the regions economic recovery and earnings growth.

In the same vein, 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 grew by 0.56%w/w, 0.81%w/w, 1.68%w/w, and 2.14%w/w respectively, despite the soaring cases of the Covid-19 Delta variant 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, and Argentina Merval Index increased by 1.04%w/w, 1.50%w/w, and 5.59%w/w respectively, save for Brazil Bovespa Index that lost 1.32% w/w to close the week.

In the coming week, we expect investors to react to the latest U.S Consumer Price Index report, which may signal that the Fed Reserve might change the monetary policy rate sooner than later, amid soaring cases of the Delta Variant Covid-19 around the globe.

DOMESTIC ECONOMY

Nigeria Generates N472.07bn and N864.72bn from Company Income Tax in Q2’2021 and H1’2021 respectively

According to the National Bureau of Statistics in its Company Income Tax (CIT) report, Nigeria generated N472.07 billion in Q2 2021, representing a 20.23% increase against N392.65 billionCIT generated in Q1’2021 thereby bringing the total CIT generated for H1’2021 to N864.72 billion. Similarly, the CIT leads the corresponding period of 2020 by 17.42%.

Taking a closer look at the report, Professional Services generated the highest amount of CIT with N130.09 billion generated and closely followed by Other Manufacturing which generated N87.27 billion, Banking and Financial Institution generated N60.01 billion, while Textile and Garment Industry generated the least and closely followed by  Automobile & Assembling, and Pioneering which generated N27.23m, N62.15m, and N64.30m respectively.

Additionally, out of the total amount generated in Q2’2021, N417.84bn was generated as CIT locally, while N51.61bn was generated as foreign CIT payment. The balance of N2.71bn was generated as Other CIT payment.

 

Value Added Tax (VAT) grew by 56.656% Y-o-Y

Nigeria generated a sum of N512.25bn as Value Added Tax in Q2’2021 as against N496.36bn generated in Q1’2021 and N327.20bn generated in Q2 2020 representing a 3.2% increase Quarter-on-Quarter and 56.56% increase Year-on-Year.

Other Manufacturing generated the highest amount of VAT with N44.89bn generated and closely followed by Professional Services generating N29.30bn, Commercial and Trading generated N21.96bn while Textile and Garment industry generated the least and closely followed by Pioneering and Pharmaceutical, Soaps and Toiletries with N77.47m, N169m, and N188.71m generated respectively.

In conclusion, the amount generated from Fiscal Revenue (Company Income and Value Added Tax) in H1 2021 print at N1.87trn, signifying the increase in economic activities in Nigeria and government willingness to generate revenue from other means. Also, the amount generated could be used to finance our budget deficit and improve the country’s overall well-being.

EQUITY MARKET

Local Bourse extends bullish sentiment to two consecutive weeks, as investors gain N370.75bnBEST1

The Nigerian Bourse ended w/w trading on a positive note to extend the previous week’s bullish sentiment, as the NGX-ASI appreciated by 1.83% from 38,810.75  points to close at 39,522.34 points. Positive market performance was recorded in four of the five trading sessions.

Investors gained about N370.75 billion, as the Market Cap. grew from N20.22 trillion in the previous week to N20.59 trillion.

At the end of the week, Banking Sector emerged as the top performer for the week with a w/w gain of +0.49%, closely followed by Oil & Gas and Consumer Goods Sector with a w/w gain of +0.43% and  +0.30% respectively, while Insurance Sector emerged as the worst performer for the week with a w/w  loss of -2.37%, followed by  Industrial Goods Sector with a w/w loss of -1.35%.

According to the NGX Weekly Summary Report, HONYFLOUR emerged as the best performing stock for the week with a w/w gain of +28.13%, while JULI emerged as the worst-performing stock with a w/w loss of -18.02%.

A total of 1.61 million shares worth N12.59 billion in N8.183 billion in 18,622 deals were traded this week by investors on the floor of the Nigerian Exchange Group (NGX), as against a total ofWORST1 1 989.593 million shares worth N8.183 billion in N8.183 billion in 19,617 deals last week.

Twenty-nine (29) equities appreciated at price during the week, higher than Twenty-three (23) equities in the previous week. Twenty-nine (29) equities depreciated in price, lower than Thirty-six (36) equities in the previous week, while ninety-eight (98) equities remained unchanged, as against ninety-seven (97) equities recorded in the previous week.

Outlook

We expect bearish sentiment next week, as investors might take profit from recently appreciated stocks, although bargain hunters might also take advantage of some low stock prices as well, as the half-year earnings period elapses gradually.  The big five banks’ half-year Financial report, movement in the Fixed income market, and the Consumer Price Index report will also influence market sentiment next week.

 

NASD OTC

NASD Market Capitalisation decreases by 0.99%w/w to Close at N647.85bn   

NASDPR

Transactions on the NASD OTC Security Exchange Market closed on a negative note to reverse the previous week’s bullish sentiment, as the NASD Security Index NSI declined by 0.99%, representing 7.45 basis points to close at  745.36 points against 752.81 points in the previous week. Investors lost N6.47 billion for the week, as the NASD OTC Market Capitalisation closed at N647.85 billion for the week.

Total trading activity for the week was valued at N264.29 million in 99 deals, against N1.05 billion in 102 deals recorded in the previous week. The most traded stocks on the exchange for the week are; SDNGXGROUP, SDCSCSPLC, SDFCWAMCO, SDNDEP, SDNIPCOPLC, SDFOODCPT, and SDNASDPLC.

SDNIPCOPLC emerged top gainer for the week, with a maximum price appreciationotc of (+10.00% to N77)while SDCSCSPLC emerged top loser for the week with a price depreciation of (-6.78% to N16.78).

This week’s price depreciation resulted from investors’ sell-sentiment in medium and large capitalized stocks among which are; SDCSCSPLC (-6.78% to N127), and SDFCWAMCO (-3.75% to N122.24).

However, the market breadth close positively, recording 4 gainers and 2 losers.

Outlook

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

 

Money Market

ntbauction

This week, the CBN held a Nigeria Treasury Bill (NTB) auction by offering N51.50bn across all tenors to roll over matured. This could be driven by the need to mop up excess liquidity in the market.

At the Primary Market Auction (PMA), the CBN offered a total of N51.50bn across the 91-days, 182-days, and 364-days tenor, but the total bid settled at N265.24bn as bid-to-offer ratio on the three tenors settled at 0.73x, 0.32x, and 14.34x respectively.

Stop rates for the 91-days and 182-days remained the same at 2.50% and 3.50% respectively, while the rate on the 364-days paper receded further by 132bps from 8.20% to close at 7.35%,sli 4 due to huge buy-interest.

Consequently, system liquidity indicators closed lower, as Overnight (O/N) and Open Buy Back (OBB) dropped to 17.25% andntba 16.75% respectively, from 20.50% and 20.00% in the previous week.

Furthermore, the average yield of the Treasury Bills closed on a bullish sentiment to 4.67%, as against 5.63% recorded last week, representing a 96bps decline.

Similarly, the average yield on the secondary Open Market Operationomo 1 (OMO) closed lower to settle at 7.65%, representing a 13bps increase against last week.

Outlook

In the coming week, we expect the money market to trade in a tight range due to the absence of any maturing instrument.

Bond Marketbond 1

This week’s activities on the Bond market were limited to the secondary market, as no new instrument was issued.

Furthermore, the average yield on the secondary bond market closed on a bullish sentiment to 8.57%, as against 9.06% recorded last week, representing a decline of 49bps.

Outlook

We expect investors to oversubscribe to the bond offers (13.98 FGN FEB 2028, 12.40% FGN MAR 2028, and 12.98% FGN MAR 2050) scheduled for Wednesday, as market watchers continue to support strong interest in risk-free assets.

exchange rate 1Foreign Exchange Market

At the I&E FX window, the Naira appreciated by 0.7%(w/w) to close on Friday (13/08/2021) at ₦410.80/USD against ₦411.50/USD from last Friday’s position. However, at the BDC, Naira appreciated by 0.97%(w/w) to close on Friday (13/08/2021) at ₦513/USD against ₦508/USD from last Friday’s position.

fr 3

Foreign Reserve

The Foreign Reserve grew $18.41 million to the level of $33.58 billion (12/08/2021) from $33.57 billion (05/08/2021).

Crude Oil

The Brent Crude price depreciated by $0.11/barrel (w/w) to $70.59/barrel this Fridaycrude 1(13/08/2021) as against $70.70/barrel last Friday (06/08/2021), representing a drop of 0.16% (w/w). Similarly, Nigeria’s Bonny Light also decreased by $0.01 to $69.76/barrel on Friday(13/08/2021) from $69.77/barrel (06/08/2021), representing a drop of 0.01% (w/w)

 

Source: GTI Research

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