FCSL WEEKLY MARKET REPORT 5TH MARCH 2021

Global Economy –Rundown:
The Trade deficit in the month of January for United State grew by 1.9% to $68.2 Billion, this was propelled by 1.6% growth recorded on Imported goods worth over $ 221Billion, as consumer spending surged due to the recent lockdown measures, as economic activities were disrupted for the month, this translated to increased import activities that were able to suppress fragile recovery from the export that appreciated by 1.6% to $135.7billion. The magnitude of consumer spending was able to curb the level of retail inventories for the month, as customers’ wallets were boosted by the government pandemic relief’s targeted at low-income households. The projected outlook for the United State trade balance tilt toward further trade deficit, this is on the strength of slim inventories and anticipated demand strength, as the U.S. Senate approves the $1.9 trillion Covid relief bill, and the pace of vaccinations remained accelerated.
 
Domestic Economy –Rundown:
The banking sector exposure to the manufacturing sector rose further, according to the Central Bank of Nigeria, Banks’ facility to the manufacturing sector rose by 21.8% to N3.19trillion as of December 2020 compared to N2.62trillion at the end of 2019. Although the sector is being engulfed with the increased facility, the contribution of the industry to the Gross Domestic Product of the country has been limited due to the weight of double digits interest rate that has been a major bottleneck impeding the industry development. Also, Key Industry players have added their voice to the unabated cost of borrowings, referencing the Special single-digit scheme being offered by development banks through commercial banks have been of limited impact due to the stringent measures in accessing these facilities. Based on this revelation the apex bank will have to intervene to ensure those teething problems are resolved so as to prevent the systematic risk that may ensue from the credit default from the manufacturing sector, as they become overburden with facilities, they are unable to service.
Currency:
The Naira contracted by 0.18% at the I&E FX window to settled at N411.00/USD, also at the parallel market, Naira appreciated to N480.00/USD.
Equities
The equities market closed the week on a bearish note as the weekly performance indicated a dip of (1.18%) and the YTD ASI growth contracted to (2.33%). The weekly average sector performance of the NSE indices declined to 2.80%, which was driven by a 6.30% contraction in the NSE Consumer Goods.
Fixed Income:
The system liquidity at the end of the week was N563.5billion, as corresponding open buyback rate and overnight rates firmed up to 15.33% and 16.33% respectively.
T-Bills secondary market activities was relatively muted as the average yield dipped by 1bps to 1.47%, as yield across all maturity spectrum closed relatively flat with the exception, of the medium-term bills.
The Bond secondary market closed bearish, as the average yield for the week inched up by 42bps to 10.57%, investors cherry-picked their respective preferred market tenor in relation to their desired yields.
 

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