FCSL WEEKLY MARKET REPORT 12TH FEBRUARY, 2021

Global Economy –Rundown:
The United Kingdom economy felt the severe brunt of the pandemic, as the economic output contracted by magnitude last experienced after the second world war, the economy plunged by 9.9% in the year 2020, while the Gross Domestic Product for the fourth quarter grew by 1.0%. However, the recent lockdown measure implemented to curb the spread of the second wave of the virus is expected to hurt the progression of the economic recovery, as such, the economic output is expected to contract by 4% within the first quarter of 2021. Also, Britain is set to witness the deepest borrowing since world war 2, as the government priority remains job protection, given the surges in the unemployment rate that is severely experienced in the hospitality and high street retail sectors. The setup of the UK economy that heavily relies on face – face consumer services than others that make up the seven advanced economies, implies that the country is expected to experience more acute disruption from the pandemic induced economic contraction.
Domestic Economy –Rundown:
The International Monetary Fund has hinted that the possibility of Nigeria returning to the pre-pandemic growth era looks slim, as the Fund has projected that the earliest time that the country is expected to return to the pre-pandemic era of real growth would be in 2022, although an estimated positive real GDP growth is expected at 1.5% in 2021. The fund projection was propelled by the downside risks from pandemic-related developments, given that the country’s recovery remains weak based on current policies stands, also, the Non-oil growth is expected to remain suppressed due to regulatory uncertainty through its inward-looking policies, as the fund asserts that the pandemic has placed Nigeria at a critical juncture, as the country’s per capita income has fallen, as well as expressing continued inflationary pressured. The fiscal authority is expected to steer the affairs of the Nation towards intense economic recovery with more consistent policies that will address hailing economic challenges.
Currency:
The Naira contracted by 2.15% at the I&E FX window to settled at N404.67.00/USD, while at the parallel market, Naira appreciated to N473/USD.
Equities
The equities market sustained its losing streaks, as its weekly performance contracted by 3.04% and the YTD ASI growth ebbed to 0.42%. The weekly average sector performance of the NSE indices contracted by 4.58%, this was driven by an 8.76% contraction in the Banking index.
Fixed Income:
The system liquidity at the end of the week was amplified, on the hills of OMO maturities as open buyback rate and overnight rates declined to 4.50% and 4.75% respectively.
T-Bills secondary market activities closed bearish as the average yield appreciated by 52bps to 1.41% for the week, as market yields across the medium and long maturity trended higher. The primary auction recorded increases in yield across the maturity sphere, as the clearing rate were 1%-91days, 2%-182days, and 4%-364days.
The Bond secondary market activities closed bearish, as the average yield for the week firmed up by 82bps to 9.88%, as yield across all maturity inched up.
 

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