FCSL WEEKLY MARKET REPORT _23RD OCTOBER,2020

Global Economy –Rundown:
According to the International Monetary Fund, the Sub Saharan region is projected to contract by 3% for the year 2020, this was the view of the fund in its recent published outlook, given the persistent wave of the economic shock that is expected to be more exacerbated among tourism-dependent economies and commodity-exporting countries, as the region is burdened with limited external financial support and non-availability of effective trusted vaccine, while other inherent risk factors of political instability and climate-related shock’s still persisting. However, anticipated growth for Sub-Saharan Africa is pegged at 3.1% for 2021, such growth will be propelled by improved exporting activities and commodity prices as well as a resurgence in both private consumption and investment. The Fund suggested an idea policy mix that focuses on the rebalancing of fiscal spending alongside endearing monetary policy that will mute inflationary pressure should be considered in event that the pandemic persists.
Domestic Economy –Rundown:
Nigeria’s compliance with the recent OPEC production cut being estimated at 80% level of compliance, as the allocated production cut for the country was 333,000 BPD, while the production capacity prior to COVID -19 was estimated at 1.8 million BPD. Nigeria and Iraq are being flagged as laggers to the attainment of the cartel efforts in achieving a rebound in the price of crude in the international market, as demand level still below the pre COVID level. Nigeria’s noncompliance to its production quota must have been spurred by its desire to make up for its dwindling revenue target as its confronted with numerous economic uphill. Based on this setback being encountered by the cartel and its allied, the possibility of extending its current 7.7million barrels per day production cut into next year remains a viable option.
Currency:
The Naira marginally dip, as the exchange rate at the I&E FX window settled at N386.00/USD, also at the parallel market, Naira contracted in value to N463/USD.
Equities
The equities market week-on-week performance indicated a 0.13% growth, and the YTD ASI growth grew to 6.91%. The sector performance of the NSE indices maintained a positive rally for the week, as the average change of the NSE Indices was 0.02%, based on the indices monitored, which was sustained by significant growth recorded from NSE Consumer Goods index.
Fixed Income:
The system liquidity at the end of the week firmed up, as both open buyback rate and overnight rates dipped to 0.67% and 1.33% respectively.
T-Bills secondary market activities was bullish as the average yield decreased by 61bps to 0.42% for the week, as market yields dipped across all maturity spectrum.
The Bond secondary market, activities maintained its bullish sentiment, as the average yield for the week dipped by 80bps to 5.00%, as yield declines were recorded across market maturity bandwidth. The Primary Bond auction for the week witnessed N45billion worth of bond sold between the maturity date of 15years and 25years at the marginal rate of 4.97% and 6.00% respectively.

 
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