FCSL WEEKLY MARKET REPORT 5TH FEBRUARY, 2021

Global Economy –Rundown:
The United State trade deficit for the year 2020 grew, according to the recent data from the United State Commerce Department reveals that trade deficit surged by 17.7% to $678.7billion, as export of goods and services for the year contracted by 15.7%, while import of goods and services only dipped by 9.5% for the year. The United State Core personal consumption expenditures index increased to 1.5% in the month of December from 1.4% recorded in November, the Core PCE being the FED’s preferred inflation tracker, while the slim firming of inflation has been driven by increase witnessed in employment cost index that rose to 0.7% in the fourth quarter, as against 0.5% for the third quarter. The commerce department release, elaborated on factors that fueled the improved fourth-quarter GDP readings, as well as giving insights into the impacts of the pandemic that have ravaged the country’s balance of trade.
Domestic Economy –Rundown:
Nigeria attracted lesser capital inflow last year as the aggregate value of foreign capital inflowed into the country was estimated at $14.3billion, as against the sum of $23.99billion imported in 2019, this represents a 59.65% contraction, also, the capital inflowed for the fourth quarter dipped by 26.81% compared to the third quarter foreign capital inflow. The United Kingdom accounted for the largest source of funds for the fourth quarter of the year, as 22.14% of the inflowed fund was attributed to the United Kingdom. Based on the type of fund, foreign Portfolio Investment accounted for 3.29% of the sum imported for Q4, while 23.49% of the inflowed sum for the same quarter were for Foreign Direct Investment, and other investments accounted for 73.22% of the aggregated inflow for the fourth quarter. The fall in the attraction of the country to foreign investors is related to the weakened economic fundamentals that imply a lower propensity for growth, while the recent pandemic further amplified the weakening economic potentials of the country.
Currency:
The Naira contracted by 0.52% at the I&E FX window to settled at N396.17.00/USD, while at the parallel market, Naira closed flat at N480/USD.
Equities
The equities weekly performance was bearish as the market contracted for all the trading day of the week to decline by 1.66% on a weekly growth basis and the YTD ASI growth contracted to 3.57%. The weekly average sector performance of the NSE indices contracted by 2.75%, this was driven by a 6.01% contraction in the Insurance index.
Fixed Income:
The system liquidity at the end of the week was tight, as the open buyback rate and overnight rates surge to 17.50% and 18.00% respectively.
T-Bills secondary market activities returned bullish as the average yield declined by 13bps to 0.89% for the week, as market yields across the short and medium maturity closed flat.
The Bond secondary market activities was bullish, as the average yield for the week dipped by 3bps to 9.06%, as yield along the medium maturity contracted.
 

Read More