On the international stage, the US Consumer Price Index (CPI) and Producer Price Index (PPI) data for the month of September were released this week. The CPI, which gauges price fluctuations by comparing retail prices of a representative selection of goods and services, demonstrated a year-over-year growth of 3.70%, closing at the previous month’s level but indicating a slight increase from market’s anticipation of 3.60%. On a month-on-month analysis, the index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase. An increase in the gasoline index was also a major contributor to all items monthly rise. Similarly, the PPI figures indicated a year-over-year growth of 2.20%, growing higher than the projected 1.60% and the previous month’s 2.00%. This growth was primarily attributed to price escalations in the final demand category, excluding food, energy, and trade services, which exhibited a significant 2.80% advancement. The PPI measures the average price changes within the primary markets of the United States, focusing on commodities produced at all stages of processing.
Ghana’s inflation rate drops to a 12-month low reaching 38.1% for September. Annual inflation decreased to 38.1% from August’s 40.1%, according to the Ghana Statistical Services. The primary factor behind this decline was food prices, with food inflation dropping to 49.4% from August’s 51.9%, while non-food prices grew by 29.3%, compared to 30.9% in August. Prices saw a 1.9% month-on-month increase. The Government Statistician credited the decrease to the stringent monetary policy actions taken by the Bank of Ghana. Despite the decline, the September 2023 inflation rate remains significantly higher than the government’s revised year-end estimate of 31.3%, in contrast to the initial projection of 18.9% presented in the November 2022 budget.
Nigeria’s central bank said on Thursday it plans to intervene in the country’s foreign exchange market occasionally to boost liquidity, while ending an eight-year ban on 43 items that had been restricted from accessing forex on the official market. The apex bank had in 2015 restricted the items from accessing FX from the I&E window, saying they were “not valid for foreign exchange and could be produced in the country. Items affected include rice, cement, palm kernel, meat and processed meat products, poultry, soap, and cosmetics among others.
Money Market
Despite the CRR debits (c. 430bn) passed by the CRR yesterday, system liquidity remained buoyant following non-deliverable forwards and remitta inflows from the Apex bank. WoW, the Open Buy Back (OBB) rate closed flat while the Overnight (OVN) rate dipped 3bps to print at 1.67%.
We expect interbank rates to hover around current levels.
Treasury Bills
The Treasury Bills market traded on a calm note for the week, albeit with a bullish undertone, underscored by demand on the long end of the curve. Few interests were observed on the 26-Sept-24 bill, with some trades executed at 9.20% levels. The Treasury Bills market also witnessed another PMA.
At the auction, the DMO offered and sold ₦36.56 billion across the standard maturities. The stop rates on the 91-, 182- and 364-day bill declined by 132bps, 144bps and 212bps from previous auction levels to close at 3.67%, 5.11% and 9.25%, respectively. Week-on-week analysis indicates a 120bps decline in the average benchmark yields, printing at 5.18%.
We expect a quiet opening to the week due to the low system liquidity.
FGN Bond Market
The FGN local bond Market witnessed another quiet week with a bearish bias as yields on the 30-year bond trended northwards to 16.30% levels. The short end bonds garnered the most demand this week, particularly the 2026 bond bid at 13.20% levels and the 2028 bond, bid at 14.15% and offered at 14.05%.
The ₦150 billion Sovereign Sukuk whose offer for subscription closed today was oversubscribed, with the total subscription reaching ₦652.827 billion while ₦350 billion was sold. Week-on-week, the average benchmark yields advanced 2bps, settling at 14.68%.
We expect a calm session as the focus will be on the bond auction.
Eurobond Market
The FGN Eurobond market displayed mixed sentiments this week. This was characterized by bullish sentiments bolstered by a dovish FED and the Israel-Hamas conflict as investors sought safe haven. The bearish trend was influenced by the Consumer Price Index rising 0.4% in September, more than the 0.3% estimate. Furthermore, the average benchmark yields lost 61bps week-on-week, settling at 11.87%.
We expect the U.S Retail Sales order data to hold sway over market direction.
Currency Market
The value of the Naira to the dollar depreciated by 310bps to print at ₦764.86/$ this week at the Investors and Exporters FX Window.
Equities Market
Pulling the curtains on this week’s performance, the ASI marked a positive finish with a 10bps day-on-day and 112bps week-on-week advancement. The banks remained in the spotlight in today’s session, primarily responsible for today’s favorable outing, supported by gains in Dangote Sugar as well. At closing, the year-to-date return advanced by 31.12% while market cap followed suit, growing by ₦0.04trillion to settle at ₦36.93 trillion. The market breadth reflected the positive momentum, with 38 advancers outperforming 33 decliners, resulting in a market breadth of 1.15x.
In terms of this week’s trading activity, both volume and value traded saw a decline of 40.10% and 53.38% to 224.07 million units and ₦4.16 billion, respectively. Access Corporation stood out as the most traded stock, recording 177.22 million units, followed by NEIMETH with 164.73 million units and Fidelity Bank with 160.89 million units. Among the top-valued equities for the week, SFSREIT took the lead at ₦4.32 billion, trailed by Access Corporation at ₦2.80 billion, and Guaranty Trust Holding Company at ₦2.39 billion.
