March 9, 2023/InvestmentOne Report
Please click to view the February 2023 Macro & Markets Update
Macro
- The Nigerian economy maintained positive performance for the ninth straight quarter according to the recently released Gross Domestic Product (GDP) report by the National Bureau of Statistics. Specifically, the economy expanded by 3.52% y/y in real terms in the last quarter of 2022, compared to 2.25% y/y in Q3 of the same year. On a year-on-year basis, the growth recorded was 46bps lower than 3.98% y/y growth seen in the corresponding period of 2021 due to unintended consequences emanating from the naira redesign, high inflationary pressure, lingering fuel scarcity, security challenges and other macroeconomic headwinds limiting growth potential…
Inflation
- Inflation in Nigeria resumed its upward trajectory after slightly slowing down last month, as revealed in the recently released data from the National Bureau of Statistics (NBS). Precisely, headline inflation increased by 48bps to 21.82% y/y, compared to 21.34% y/y printed in December. Meanwhile, inflationary pressures remained elevated and broad based in the period under review as the core and food indices rose further to 19.16% y/y and 24.32% y/y respectively. On a month-on-month basis consumer prices rose by 1.87% in January, 16bps higher than 1.71% printed in December…
Fiscal
- Nigeria’s crude oil production was reported to have risen in the past month. According to the Nigerian Upstream Regulatory Commission (NUPRC), aggregate crude oil production (including condensates) witnessed an improvement of 5.67% m/m to 1.49mbpd in January…
- Elsewhere, Federal Account Allocation Committee (FAAC) disbursement for the month of February 2023 (from revenues generated in January) stood at N750.17 billion, a significant decline of 24.24% from the N990.19 billion paid in the previous month. The total amount distributed comprised gross statutory revenue, Value Added Tax (VAT), Electronic Money Transfer Levies (EMTL), augmentation from non-mineral revenue, and an additional sum of N15.00 billion from savings.
Monetary Policy & Fixed Income
- For the month under view, we saw an improvement in system liquidity driven by inflows from OMO and FGN coupon which outweighed funding/debits. In addition, the average interbank market transactions, i.e., standing lending and deposit facilities, were substantially positive at N14.3 billion, in contrast to the January figures of N2.83 billion. Consequently, open buy back rate remained stable at 10.50%, while overnight rate decreased by 17bps to settle at 10.83%…
- Elsewhere, the fixed income market traded on a mixed footing amid cherry picking of yields at attractive prices and anticipation of higher rates by the authorities…
Foreign Exchange
- Oil prices experienced volatility in the previous month, dropping to a low of $79.94 per barrel and subsequently rising to a high of $86.61 per barrel. At the end of the month, Brent settled slightly lower at $83.89 per barrel compared to the previous month-end price of $85.46 per barrel. The fluctuations in oil prices could be attributed to several factors, such as China’s reopening and increased optimism, concerns about a more hawkish stance from the Fed and its potential negative impact on the US economy, tensions between the EU and Russia over oil price caps, increased oil output from Nigeria, and supply-chain disruptions in Turkey’s Ceyhan oil port following the Turkey-Syria earthquake.
Equites
- The bullish impetus that began in the last quarter of 2022 was sustained through the month of February 2023, marking both the fourth consecutive monthly gain and the second for the year. The NGX All-Share Index appreciated by 4.82% month-on-month to settle at 55,812.68pts. Similarly, market capitalization increased from N28.99 trillion to N30.40 trillion, and year-to-date returns inched up to 8.89%. In terms of activity levels, average daily volume and value increased slightly by 10.78% and 1.70%, respectively, as investors traded an average daily volume of about 311 million units and an average daily value of N4.73 billion…
