FCSL WEEKLY MARKET REPORT_ 24TH DECEMBER,2020

Global Economy –Rundown:
According to the International Monetary Fund recent publication, where it addresses concerns about the inconstancy of capital flows in the global ecosystem that was induced by the pandemic, whose ripple effect has been more pronounced in emerging markets that recorded huge cash outflow, where the halt of portfolio flows have translated to depreciating exchange rates, higher funding costs and limited access to external financing, although monetary policies adopted by various global apex banking authorities have been able to provide some respite. The fund has stressed the need for the development of a framework that will assist policymakers in determining the tailed events in capital flows so that early risk-mitigating action could be taken. However, in recent time various multiple policies instrument has been adopted by authorities in curbing the volatility of capital flow but they remain adrift to the appropriate mix of policies that could provide adequate mitigating respite to the sharp cash flow movement divergence that has been induced by the global shocks.
Domestic Economy –Rundown:
The Manufacturing PMI for the month of December, conducted between 7^th -11^th, contracted from November expansionary readings to 49.6 index points, while subsectors reviewed under the manufacturing PMI, had 4 sectors reporting an expansion reading for the month, as one of the sectors reported a flat reading for the month, and the remaining 9 sectors maintained a contractionary reading. According to the manufacturing sector activities, the Production level, New Orders, and Supplier’s delivery time maintained expansionary readings for the month, while the lagging activities for the month were Employment level and Raw material inventories. Also, the Non-manufacturing PMI still maintained its contractionary readings for the month as the index point for the month was 45.7 points, as all its activities level remained within this region as well. Based on the above readings for both PMIs, this suggests a faint economic activity level that may imply that the Nation’s path to economic recovery remains feeble.
Currency:
The Naira closed the week with marginal appreciation, as the exchange rate at the I&E FX window closed at N392.00/USD, also at the parallel market, Naira firmed up by 0.42% to N475/USD.
Equities
The equities market week-on-week performance indicated a 5.42% growth, and the YTD ASI grew to 44.55%. The sector performance of the NSE indices was also on a bullish rally, as the average change of the NSE Indices was 3.74%, based on the indices monitored, which was propelled by a significant rise recorded from NSE Industrial index.
Fixed Income:
The system liquidity for the week improved as both open buyback rate and overnight rates ebbed to 0.43% and 0.58% respectively.
T-Bills secondary market activities remained bullish as the average yield dipped by 3bps to 0.37% for the week, as yield across the short and long term maturity dipped.
The Bond secondary market, activities was bearish, as the average yield for the week firmed up by 58bps to 6.68%, as yield appreciated across all maturity spectrum.
 

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