This week, Nigeria witnessed notable developments in both tax administration and non-oil export growth. The Federal Inland Revenue Service (FIRS) introduced the e-Invoice system to modernize the country’s tax framework, aiming to improve transparency and compliance in business transactions. This initiative aligns with broader tax reforms, including efforts to simplify tax regimes for small businesses and enhance revenue collection, with a target of increasing Nigeria’s tax-to-GDP ratio. Concurrently, APM Terminals Apapa recorded a 25% rise in non-oil export cargo volumes in the first half of 2024, underscoring the country’s efforts to diversify away from oil dependency. The terminal plans to host an exporters’ forum to address challenges in the non-oil export sector, further boosting Nigeria’s export growth. These measures reflect Nigeria’s broader strategy to strengthen its economy through reforms in taxation and export sectors.
Money Market
Market liquidity opened the day at ₦272.48 billion short. The Open Buy Back (OBB) rate and the Overnight (OVN) rate closed at 29.69% and 29.97%, respectively.
We expect rates to hover around current levels.
Treasury Bills Market
The FGN Treasury Bills Market traded on a quiet note this week. Nevertheless, the 20 Feb bill was quoted 20.70/20.20 while the 22 May bill was largely offered at 20.25% as bids remained scarce. Minimal activity was skewed to the September bills with the Sept 11 quoted 18.50/18.30 while the 2 Sept bill was largely offered with no bids to match. There was also movement seen on the 27 Mar bill bid at 20.55% and offered at 20.25% while the 6 Mar bill was seen offered at 19.80%. Week-on-week, the average benchmark yield appreciated by 28bps to close at 20.80%
We expect similar sessions as the illiquidity persists.
FGN Bond Market
The FGN Bonds Market traded began the week on a bullish bias. Evidently, bids improved on the 33s to 19.98% while offers stood at 19.90%. Also, the FEB 2034 bond was quoted 19.75/19.50. Sometime during the week, we had trades consummated on the May 19.89% 33s and FEB 34s at 19.70% and 19.55%, accordingly. However, the bears were evident at the close of the week with offers on the 33s and 34s seen at 20.20% and 20.00% respectively. In addition, the old 2027 bond exchanged hands at 18.70%. Week-on-week, the average benchmark yield declined by 4bps to close at 18.45%
We expect mild buying sentiments.
FGN Eurobond Market
The FGN Eurobonds Market sustained the bullish momentum as we saw the Federal Reserve cut rates by 50bps, bringing the Fed fund rate to 4.75-5.00%. The United States Retail sales data showed a 0.1% growth in comparison to an expected 0.2% decline. Also, Unemployment Claims printed at 219k vs 230k forecast vs 231k prior. However, the week closed on a negative note as investors indulged in profit-taking activities. Week-on-week, the average benchmark yield declined by 33bps to close at 9.42%
We expect similar sentiments.
Currency Market
The value of the Naira to the dollar appreciated by 32bps compared to the previous week, printing at ₦1541.52/$ 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 20bps to close at 98,247.99. Market capitalization also rose, closing at ₦56.45 trillion. Market breadth was positive at 1.48x, with 64 stocks advancing and 43 declining. This performance was driven by gains in FIDSON (+10.00%), MEYER (+9.98%), and CAVERTON (+9.82%), and losses in FBNH (-9.98%), NNFM (-9.96%), and FLOURMIL (-9.91%).
Trading activity was mixed, with the volume of shares traded appreciated by 17.15% to 554.22 million units, while the value of shares traded depreciated by 10.91% to ₦10.12 billion. The most actively traded stocks by volume were FBNH with 151.90 million units, JAPAULGOLD with 149.76 million units, and FIDELITY with 27.23 million units. In terms of value, FBNH led with ₦4.37 billion, followed by OANDO at ₦691.22 million, and UACN at ₦536.23 million.
Reflecting the day’s mixed performance, the NGX All-Share Index reflected a 1-week gain of 0.81% and a 4-week gain of 2.45%, with an overall year-to-date gain of 31.39%. Other notable indices are the NGX Top 30 Index (+0.15%; +1.09% 1WK; +30.82% YTD), NGX Banking Index (-0.61%; +1.26% 1WK; 1.80% YTD), and NGX Oil & Gas Index (+0.41%; +0.02% 1WK; +84.80% YTD)
