FCSL WEEKLY MARKET REPORT_ 4TH DECEMBER, 2020

Global Economy –Rundown:
According to the recent Chinese November Purchasing Managers Index Readings that indicated industrial activities have snapped back to pre-pandemic activity levels, given that the current month readings is the highest in the last three years, as the official Manufacturing Purchasing Managers’ Index for the month was 52.1 index point as against prior month readings of 51.4. However, these encouraging readings have not demystified to aggregate expansion across the manufacturing spectrum, as this masked the struggles being encountered by smaller firms and depressed exporting activities. The country’s manufacturing activity level for the month was propelled by improved demand and supply, appreciating prices of raw materials, improved prospects of manufacturing size, and steady recovery from import and export activities. However, the possible headwind to the expansionary momentum remains with smaller firms that constitute the majority of workforce employers that are still on the recovery path.
Domestic Economy –Rundown:
The Apex Bank in the course of the week, introduce a Special Bills whose features are; 90days maturity, nil coupon, and applicable yield is to be fixed by the Bank that expressed the intent of the bill as being liquidity management. The bill will avail both institutional and retail investors an investment opportunity, as well as trading eligibility of the bill among the banks, and it qualifies as part of the Apex bank liquid asset criteria in the computation of liquidity ratio by deposit money banks. However, the bill will not be acceptable for repurchase agreement and not discountable at the CBN window. In our view, we recognize that this as a laudable idea by the Apex bank, as we believe that this bill is with an embedded intent of regulating the excess liquidity in the economic space, as well as stemming the inflationary pressure, and the anticipated beneficiary among the market space should be the Money market.
Currency:
The Naira dipped for the week, as the exchange rate at the I&E FX window dipped by 1.22% to N395.00/USD on a week on week basis, while at the parallel market, Naira Firmed up by 4.04% to N475/USD.
Equities
The equities market week-on-week performance indicated a 0.72% growth, and the YTD ASI grew to 30.91%. The sector performance of the NSE indices retreated from its prolonged rally for the week, as the average change of the NSE Indices was -0.97%, based on the indices monitored, which was impaired by a significant dip recorded from NSE Banking index.
Fixed Income:
The system liquidity for the week ebbed as both open buyback rate and overnight rates increased to 3.63% and 4.25% respectively.
T-Bills secondary market activities was flat as the average yield remained unchanged from the previous week’s yield of 0.09% for the week.
The Bond secondary market, activities was bearish, as the average yield for the week firmed up by 21bps to 4.93%, as yield appreciated around the medium-term bond.
 
 

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