For the first time in over a year, economic activities in Nigeria have shown positive growth, according to the Central Bank of Nigeria’s (CBN) latest Purchasing Managers’ Index (PMI) report for August 2024. The PMI reached 50.2 index points, signalling expansion after 13 months of contraction. The growth was driven by increases in output, new orders, and raw material stocks, with output at 50.8, new orders at 50.5, and raw material inventories at 51.3. However, employment levels continued to decline, marking the eighth consecutive month of contraction, with a reading of 48.7 points. Sectoral performance was mixed. The services sector grew for the third straight month, led by business activities like motor vehicle repair, though transportation and warehousing contracted. The agricultural sector also saw its first growth in months, with a PMI of 50.5, though subsectors such as livestock and fishing remained weak. Meanwhile, the industrial sector continued to struggle, registering a PMI of 49.2, reflecting ongoing contraction. A separate report from Stanbic IBTC placed Nigeria’s PMI at 49.9 for August 2024, slightly below the CBN’s figure but still reflecting improvement
Money Market
Market liquidity opened the day at ₦276.66 billion short. The Open Buy Back (OBB) rate and the Overnight (OVN) rate closed at 31.25% and 31.70%, respectively.
We expect rates to hover around current levels.
Treasury Bills Market
The FGN Treasury Bills Market traded on a mildly active note this week. During the week, the CBN floated N500bn across the standard tenors. At the auction, there was no sale on the short and mid tenored bills while a total of N459.60bn was sold on the long end out of a total of N678bn with the stop rate declining by 7bps from previous level to close at 21.80%. Also, at the PMA, the DMO offered and allotted N233.31 billion across the standard tenors, while total subscription stood at N1.13 trillion. Stop rates on the 91-day, 182-day bill and 364-day bill declined by 120bps, 170bps and 196bps to 17.00%, 17.50% and 18.94% respectively. Sequel to the auctions, we saw the 2 sept OMO bill offered at 20.60% while bids remained scarce. Furthermore, the 4 Sept NTB was quoted 18.25/18.05, while the 27 March bill exchanged hands at 18.70%. Week-on-week, the average benchmark yield declined by 142bps to close at 17.96%
We expect a calm session ahead of the PMA on Wednesday.
FGN Bond Market
The FGN Bonds Market witnessed quite a bullish start at the beginning of the week with trades consummated on the May 33s and 31s at 19.60% and 19.35%, respectively. We also saw the Feb 34s bid at 19.40% and offered 19.15%. However, as the week progressed, there was a retracement with the May 33s quoted 19.90/19.75 and the Feb 34s at 19.80/19.50. Furthermore, 2031 bond was bid 20.00% and offered at 19.65% while trades were consummated on the newly issued 2029 bond and 38s at 19.35% and 17.30%, respectively. Week-on-week, the average benchmark yield declined by 22bps to close at 18.44%
We expect a less active trading session.
FGN Eurobond Market
The FGN Eurobond Market traded on mixed sentiments this week. It was a data filled week from the United States. The ISM Manufacturing PMI printed at 47.2 vs 47.5 expected and 46.8 prev. A bit of hope ensued when the JOLTS Job Openings Data printed at 7.67M vs. 8.09M forecast and 8.18M prior. The ADP Employment data printed at 99k vs. 144 forecast and 122k prior, while Unemployment Claims came in at 227k vs 231k forecast and prior. In addition, the Nonfarm Payroll data showed that 142K jobs were added against 160K forecast and 89K prior while unemployment rate printed at 4.2% as expected and 4.3% prior. Lower oil prices continued to pull the market down on the back of weaker demand and increased supply. Week-on-week, the average benchmark yield appreciated by 19bps to close at 9.71%
We expect a similar session.
Currency Market
The value of the Naira to the dollar appreciated by 33bps compared to the previous week, printing at ₦1593.32/$ to close the week at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM).
Equities Market
The local bourse ended the day with the benchmark NGX All-Share Index (ASI) appreciating by 23bps to close at 96,433.5. Market capitalization also rose, closing at ₦52.68 trillion. Market breadth was positive at 2.23x, with 38 stocks advancing and 17 declining. This performance was driven by gains in OANDO (+10.00%), UACN (+10.00%), and BERGE (+9.97%), and losses in DEAPCAP (-9.62%), PZ (-9.52%), and ETERNA (-6.25%).
Trading activity was negative, with the volume of shares traded declining by 20.5% to 392.50 million units, while the value of shares traded depreciated by 8.4% to ₦12.02 billion. The most actively traded stocks by volume were JAIZBANK with 54.29 million units, ZENITHBANK 34.50 million units, and NOTORE with 34.31 million units. In terms of value, NOTORE led with ₦2.14 billion, followed by OANDO at ₦1.44 billion, and ZENITHBANK at ₦1.28 billion.
Reflecting the day’s mixed performance, the NGX All-Share Index reflected a 1-week decline of 0.15% and a 4-week loss of 2.20%, with an overall year-to-date gain of 28.97%. Other notable indices are the NGX Top 30 Index (+0.10%; -0.23% 1WK; +28.34% YTD), NGX Banking Index (+0.56%; +0.95% 1WK; -4.37% YTD), and NGX Oil & Gas Index (-0.20%; +3.93% 1WK; +81.15% YTD).
