November 19, 2018/Access Bank Plc
POLITICS
The Federal Ministry of Petroleum Resources disclosed that Nigeria’s oil production, including condensates, settled at 2.158 million barrels per day (mbpd). in September 2018.The ministry in its Periscope Newsletter had indicated that crude oil production, including condensates, stood at 1.82 million barrels per day (mbd) in May and 1.89mbd in June 2018.
These were lower than the average 2 mbd crude oil production the country recorded in the first four months of 2018 and are still far lower than the 2.3 mbd production benchmark set in the 2018 budget.
The ministry also stated that on the average, the country consumed up to 52.80 million litres of petrol within this period. In August, the Organisation of Petroleum Exporting Countries (OPEC) stated that Nigeria produced about 1.71mbd of oil alone which was below the 1.8mbd production cap agreed with it and Libya in 2017.
The development also followed disclosure by OPEC that demands for its oil will increase to 40mbd in 2040, with demands from developing countries pushing it up. Speculations have it that while non-OPEC countries are likely to increase global oil supply by more than 9mbd between 2017 and 2027 with the major driver being United States tight oil, and significant additions from Canada, Brazil and Kazakhstan, they would eventually decline by around 4mbd.
ECONOMY
Local Economy
The Central Bank of Nigeria (CBN) has released its Consumer Expectations Survey Report for Q3 2018. According to the report, the Consumer Overall Confidence rose to 1.5 Index points, compared to the previous quarter of Q2 2018 when the index was recorded at -6.3 points.
Respondents attributed the change in outlook to improved economic conditions. The consumer outlook for the next quarter and next 12 months were also positive at 24.7 and 30.1 points respectively, attributable to the expected increase in net household income, the anticipated improvement in Nigeria’s economic conditions, and expectations of increased savings over the next 12 months.
The survey covered a sample size of 1,770 Households randomly selected from 207 Enumeration Areas (EAs) across the country, with a response rate of 96.9%. In another development, the CBN reported that Nigerian banks recorded 20,768 cases of frauds and forgeries (attempted and successful) amounting to N19.77 billion in the first half of 2018.
The apex bank disclosed this in its economic report for the first half of 2018. According to the CBN, the actual loss by banks to frauds and forgeries, amounted to N12.06 billion, compared with the N0.78 billion and $0.03 million, suffered in the first half of 2017. It noted that fraud and forgery incidences were perpetrated by both bank staff and non-bank culprits.
MARKET
Stock Market
The stock market closed last week on a negative note amid tepid investor sentiment. The All Share Index (ASI)- the main index that tracks share prices at the Nigerian Stock Exchange (NSE) dropped by 141.93 points, representing a loss of 0.44% to close at 32,058.28points.
Aggregate market capitalisation of quoted equities similarly declined by N5 billion to close at N11.70 trillion. This week, we expect the market to remain largely downbeat in the absence of any immediate positive impetus.
Money Market
Money market rate increased marginally amidst a quiet week. Net outflow for the week was N6 million which might explain the slight upward trend. Consequently, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates edged up to 6.33% and 7.17% from 4.25% and 5% respectively the previous week. Longer dated placements settled in varying directions, as the 30-day NIBOR closed lower at 11.94% from 13.09% and 90-day NIBOR settled higher at 14.15% from 13.84%. This week, rates are expected to trend upwards due to expected Retail Secondary Market Intervention Sales.
Foreign Exchange Market
The naira-dollar exchange rate depreciated at most market segments last week. At the official window, it lost 5 kobo to settle at N306.70/$ from N306.65/$ the previous week. Similarly, at the parallel market the local unit weakened N1 to close at N364/$ from N363/$. Meanwhile, at the interbank market the currency appreciated by 60kobo to settle at N360.52/$ from N361.73/$.
The weakening seen in the official and interbank markets comes amidst sustained intervention in the FX market by the monetary regulator. This week, we expect the naira to continue trading within current rates in all markets as the CBN continues to supply FX.
Bond Market
Bond yields inched higher across most maturities. Sell-off were witnessed majorly among long-dated instrument such as the 2034 and 2037 bond. Yields on the five-, seven-, ten- and twenty-year debt papers settled at 15.23%, 15.46%, 15.50% and 15.70% from 15.09%, 15.49%, 15.48% and 15.67%respectively the previous week.
The Access Bank Bond index increased slightly by 1.85 points to close at 2,665.09 points from 2,663.24 points the previous week. This week, we expect the market to remain quiet, with trades largely order-driven as market participants anticipate the outcome of the MPC meeting.
BUSINESS UPDATE
| Update on Commodities Market Oil prices retreated last week, as fears of a supply squeeze receded following the US government’s decision to permit eight nations to keep buying some crude from Iran despite a new set of sanctions against the OPEC member. Bonny light, Nigeria’s crude oil benchmark, settled $6.31 lower at $71.4 per barrel. Precious metals prices declined on muted demand and stronger dollar. Gold was down 0.24% at $1,216.22 per ounce, while silver eased 0.3% to $14.30 per ounce. This week, oil prices will likely be supported by expectations OPEC would start withholding supply soon. For precious metals, we expect prices to draw strength from on-going Brexit turmoil in the UK and trade tensions between US and China.
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REGIONAL DEVELOPMENT
Ghana
Ghana Budget Deficit seen easing to 4.2 pct in 2019
Ghana aims to narrow its budget deficit to 4.2% of gross domestic product in 2019 from 4.5% in 2018. It forecasts GDP growth of 7.6% including oil. The West African commodity exporter aims for inflation of 8% by the end of next year, the same as its 2018 target. In a budget statement to Parliament, Non-oil growth is established at 6.2%.
Zambia
Zambia Reaffirms Commitment to Improving Debt Transparency
In a conference last week, Zambia reaffirmed its commitment to improving the transparency of its debt management and will ensure that debt levels remain sustainable, responding to concerns about rising debt in Africa’s second-largest copper producer, the Zambian President admitted their readiness to heed advice from donors and would ensure that it took out only concessional and low-interest loans. The International Monetary Fund (IMF) rejected Zambia’s borrowing plans earlier this year and said the southern African country was at high risk of debt distress, unnerving investors holding Zambian debt. The World Bank reiterated that African countries need to act decisively against growing debt. The Zambian Finance Minister disclosed about their plans on debt restructuring with China, a vital player in the Zambian economy before the year runs out.
WORLD ECONOMY
Soaring Export growth in China
In China export rose by 15.6% y-o-y customs data showed. Continued strong export growth in October reflected accelerated deliveries of export orders ahead of the U.S. tariff hike. Similarly, imports increased by 21.4% from a year earlier and suggest that Beijing’s stimulus measures are having an impact. The trade surplus widened to $34 billion from $31.3 billion previously. The stronger-than-expected import figures for China soften the concerns about a slowdown in global demand.
Fastest Economic Growth Rate in UK Since the End of 2016
In the United Kingdom, a preliminary estimate by the Office for National Statistics (ONS) showed that the economy grew by 0.6% q-o-q in the third quarter. This follows a 0.4% expansion in Q2 and marks the quickest growth rate since the end of 2016. Household spending grew by 0.5%, but business investment fell by 1.2%. This was the third quarterly contraction and likely reflects a hesitation from businesses to commit to investment given the persisting uncertainty surrounding Brexit.
Fitch Affirms India’s Rating at BBB-
Credit rating agency, Fitch, affirmed India’s ‘Long-Term Foreign-Currency Issuer Default Rating’ (IDR) at ‘BBB-‘ with a stable outlook. The rating agency said that a weak fiscal position continues to constrain the ratings and there were significant risks to macroeconomic outlook. Government debt at close to 70% of GDP and expenditures being difficult to control in the run-up to general elections were main reasons for the weak fiscal position. In a statement, Fitch said it expects India’s real GDP growth to rise to 7.8% in the current year, from 6.7% last year.
INDICATORS
Inflation Rate
Exchange Rates
External Reserves
GDP Growth Rate (Quarterly)
Unemployment Rate