FCSL WEEKLY MARKET REPORT_ 16TH OCTOBER_2020

Global Economy –Rundown:
According to IMF recent global economic outlook for the year, it has projected that the global economy will be contracting by 4.4% which is a slight improvement to its earlier projection of a 4.9% economic contraction, this slight moderation was fueled by glimpse of recovery exhibited, as the global economy becomes geared towards full reopening, while pulled back is still being experienced in emerging and developing economy. However the fund has made an optimistic projection for the coming year, as it anticipates that the global economy will rebound by 5.2% growth, it also projects that countries that are contact intensive and oil export-driven will encounter more impaired setback compared to manufacturing-led economy and income divergence among advanced economy and emerging and developing economy is expected to be exacerbated. The economy projection for advanced economy is estimated at 5.8% contraction for 2020, while a rebound is expected at a 3.9% growth for 2021, whereas emerging and developing economy projection for 2020 is estimated at 5.7% contraction and 2021 growth is estimated at 5%. The downside risk to the Fund projection is an intense resurgence of the virus in event that the hope for vaccine discovery is deterred, then the ripple effect on the economy will result in a severe financial market shock. The fund has beckoned on policymaker to focus on policies that enthrone stronger, equitable, and sustainable economic growth.
 
Domestic Economy –Rundown:
The consumer price index for the month of September maintained its elevated pressure as the index for the month was 13.71%, which represents a 0.49 percentage change from the previous month Consumer Price Index of 13.22%. The connecting index to the Consumer Price Index, returned elevated indices for the month, as both food item inflation and Core inflation both appreciated to 16.66% and 10.58%. The persistent rise in Consumer Price Index, is associated with structural clefts associated with disrupted farming cultivation and harvesting, also hike in electricity tariffs, increased Premium Motor Spirits, and prolonged border closures remain the major propelling factors for an elevated inflationary pressure. According to the state inflationary demography, Bauchi, Zamfara and Kogi were the states with the highest all items inflation of 17.85%, 17.42%, and 16.66%, while Lagos, Abuja, and, Kwara were states with less all items inflation of 11.19%, 10.59%, and 10.53%.
Currency:
The Naira closed flat, as the exchange rate at the I&E FX window settled at N385.83/USD, while at the parallel market, Naira depreciated in value to N462/USD.
Equities
The equities market week-on-week performance indicated a 0.86% growth, and the YTD ASI growth grew by 6.77%. The sector performance of the NSE indices remained bullish for the week, as the average change of the NSE Indices was 1.34%, based on the indices monitored.
Fixed Income:
The system liquidity at the end of the week firmed up to N528.7BN, and the open buyback rate and overnight rates dipped by 1.20% and 2.00% respectively.
T-Bills secondary market activities was bullish as the average yield decreased by 34bps to 1.01% for the week, as market yields dipped across all maturity spectrum. According to the primary auction for the week, the T-bills sold amounted to N124.9BN at the respective marginal yield of 1%-91days, 1%_182days, and 2%_364days.
The Bond secondary market, activities maintained its bullish sentiment, as the average yield for the week dipped by 125bps to 5.80%, as yield declines were recorded across market maturity bandwidth.
 

Read More