FCSL WEEKLY MARKET REPORT_ 31ST DECEMBER, 2020

Global Economy –Rundown:
The Brexit journey that began with the 2016 referendum, where the United Kingdom decided to seek a divorce from the European Union, an economic bond that has been in existence for 48years, was terminated on the 31^st January 2020, despite the divorce being effected, the separation was left in the balance on the hills of the transition agreement which will define the post-Brexit trade relationship between Britain and European Union, and this was eventually finalized by the eve of Christmas, while the transition period negotiation was cliff-edge around ensuring fair competition, enforcing and governing post-Brexit the trade deal, and fishing rights. Upon the climax of attaining Brexit with a deal, implies that Britain will now take charge and dedicates its trade transaction that will be devoid of Brussels control.
Domestic Economy –Rundown:
According to the Debt management office, the country’s aggregate Public stock grew to N32.22trillion as of 30^th September 2020, compared to the previous quarter debt stock that stood at N31.01trillion. The agency revealed that the increase of debt stock for the period was propelled by the shortfall in revenue generated, as the pandemic hampered the earning capacity of the government. Based on the source of debts, foreign debts constitute 37.82% of the aggregate debt, while 62.18% of the aggregate debt were sourced locally, while details of the cost of servicing domestic borrowings is estimated at N604.187billion and the corresponding cost of servicing foreign loan is estimated at N192.718billion, both for the third quarter of 2020 fiscal year. The Nation’s growing debt stock should be of concern to the fiscal authority, if this is not abated, then future growth potentials of the country would be hindered, as earnings that should be deployed towards capital projects that will promote growth will be used up in recurrent expenditure of debt servicing.
Currency:
The Naira depreciated in value as it dipped by 4.66% at the I&E FX window to close at N410.25/USD, also at the parallel market, Naira shed off 1.06% of its previous week value to end the year at N470.00/USD.
Equities
The equities market week-on-week performance indicated a 3.79% growth, as the year ASI grew by 50.03%. The sector performance of the NSE indices was also on a bullish rally, as the average change of the NSE Indices was 2.25%, 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 dipped as both open buyback rate and overnight rates increased to 0.50% and 0.83% respectively.
T-Bills secondary market activities was bearish as the average yield inched up marginally by 6bps to 0.44% for the week, as yield across the medium and long term maturity increased. According to the T-Bills auction, bills sold were across to tenor bandwidth of 91days and 364days, with the respectively marginal clearing rate of 0.04% and 1.21%.
The Bond secondary market, activities was bearish, as the average yield for the week firmed up by 12bps to 6.80%, as yield appreciated across the medium-term spectrum.
 

 
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