Market, Business, Economic Outlook For Week 49

This report takes a comprehensive look at major events in the economic calendar and market activities in Nigeria and the world. It also previews what should likely take place in Nigeria this week.

In the NGX Equities market last week, the equity market suffered a poor run of form. The equity market sustained losses that cost investors more than NGN450 billion as the market cap dipped to NGN21.98 trillion. Entering into the month of December, capital market analysts had hoped for a better run of form considering the fact that trading in November moved along a straight line within a 52-week margin.

Any hope of a recovery following the Friday before last week was dashed as the market still got confused on how to handle the Omicron COVID-19 variant.

By Friday, December 3, 2021, the aggressive decline in the all-share index slowed down as it closed at 42,167 basis points with a value of N1.9 billion in 2687 deals. This 0.19% drop clearly shows the mood of the market for the past week.

In an earlier report, we hoped for a bullish run in the equity market considering the fact that the MTNN public offering was to be on sale, Airtel Africa's completion of its Nigeria operations, and calm in the legal situation between FlourMill, Honeywell Flourmills, and ECOBANK, amongst other things, which were going to settle the market and create more buying opportunities.

Our analysts had also taken into account the release of financial statements from some of the blue-chip companies in justifying a possible bullish recovery for the NGX equity market.

However, nobody anticipated the impact the new variant was going to have on trading in the equity market.

We are confident that the MTNN new public offering, ABC TRANSPORT new public offering, FBNH, ZENITHBANK, ACCESS, and TOTAL ENERGIES MARKETING PLC should drive investors' confidence upward.

The money market was rather quiet in week 48, as there was an absence of any significant funding pressure. Overnight lending rates had fewer voluminous changes as basis point reactions ranged from 15bps to 250bps. This change saw movement in the rates range from 15% to 17%.

Continuing in that light, the FX market had fewer liquidity challenges in both the interbank market and the Investors and Exporters window.

Consequently, the naira depreciated by 1% to 2% in the I & E window but remained stable in the interbank bank.

On the other hand, the naira depreciated by less than 10% to close at NGN561/USD in some places in the parallel market.

There were no matured OMO bills for week 48, nor were there any treasury bills. Following that, yields in the NTB Bond market stayed relatively flat across

However, we expect activity in the NTB secondary market with some bills coming to maturity and the government's driving effort to raise more capital through the money market.

As the year comes to an end, fears about price increases in basic food items gain momentum.

Figures from the Nigerian Bureau of Statistics (NBS) showed that the Consumer Price Index stood at 20.75%.

Apparently, figures from a cross section of popular markets in Nigeria showed that the CPI is indeed more than 20.75%. We fear that with the current gas price increases and persistent food supply shortages occasioned by security challenges in the northern part of Nigeria, the CPI will reach 22.25% by the end of the year.

This assertion also took into account the December Christmas shopping that happens every year.

The last non-farm payroll report was released last Friday, and the figures were rather disappointing as only 210,000 new jobs were added, compared to a forecast of 500,000 for the month of November. The dollar took a bashing as safe-haven assets such as gold and the Japanese Yen briefly reacted.

This situation caused the Federal Reserve Chairman, Jerome Powell, to lower the rates, especially the interest rates.

Finally, the world will still be looking forward to good news from the CDC, WHO, and other health bodies about information on the new COVID-19 variant called Omicron.

Hopefully, we don’t nose dive into another lock down, as some countries are already thinking of that.