Economy
Nigeria CPI for June 2024
The National Bureau of Statistics (NBS) on Monday, July 15, 2024, revealed that Nigeria’s inflation increased to 34.19% in June 2024 from 33.95% in May 2024 and 22.79% in June 2023. This represents the 18th consecutive rise in Inflation since January 2023. Food and core inflation rose to 40.87% and 27.40% year-on-year (Y-o-Y) in June 2024 from 25.25% and 20.06% in June 2023, respectively. Analysts anticipated further uptick in inflation for July 2024 as the naira remains depreciated and food prices, among other drivers, remain elevated.
50% One-Off Tax on Local Banks FX Revaluation Gains
The federal government seeks to impose a one-off 50% tax on local banks that have realised revaluation gains. The government hopes to use the funds raised to finance the increase of N6.2trn in the 2024 approved budget, which will increase the budget from N27.5trn to N33.7trn. Of the N6.2trn, N3.2trn is earmarked for infrastructure projects, while N3trn is intended for recurrent expenses. The Central Bank of Nigeria had previously directed banks not to utilise the revaluation gains for dividend payments or operating expenses. Analysts have expressed different concerns about the purpose, size, timing, communication, and other technical details of the windfall tax. A major consensus is that while taxing the windfall FX gains of banks may seem justifiable, the size and timing, particularly regarding the ongoing recapitalisation, may deter investors’ interests in the banking industry.
Minimum Wage Set at N70,000
President Bola Tinubu met with the leaders of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) on Thursday, July 18, 2024, and agreed on N70,000 as the new national minimum wage for workers in the country. It was also stated that the minimum wage will be reviewed every three years. While the wage negotiations have reached a settlement point, concerns linger on the real value of the new minimum wage amidst the current headline and food inflation figures at 34.19% and 40.87% in June 2024.
China GDP for Q2 2024
Official data released on Monday, July 15, 2024, shows that the Chinese economy grew by 4.7% in Q2 2024. The growth, however, falls behind the government’s 5.0% target for 2024 as the property sector crisis persists, local government debt escalates and consumption declines. We expect government intervention using fiscal and monetary measures to stabilise the property sector, boost demand and drive growth, as the government has stated its commitment to a growth of 5% in 2024.
UK CPI for June 2024
Data from the UK Office of National Statistics (ONS) revealed that consumer prices in the UK rose by 2% in June 2024. The recent data remains unchanged relative to May 2024. With current inflation levels at the 2% target, the Bank of England (BoE), which left its rates on hold in its last meeting, is expected to cut rates later in the year.
ECB Monetary Policy Rate
In line with market expectations, the European Central Bank left its key interest rates unchanged at its July meeting on Thursday, July 18, 2024. The deposit facility rate was therefore maintained at 3.75%, the refinancing rate at 4.25%, and the marginal lending rate at 4.50%. In its last meeting, the ECB cut interest rates by 25 basis points. However, the ECB President, Christine Lagarde, left the market without a hint on expectations for a rate cut in September 2024. We anticipate a rate cut should inflationary data douse by its next meeting in September.
The Week Ahead
| Peoples Bank of China Interest Rate Decision (PBoC) | Monday, July 22, 2024 |
| CBN MPC Interest Rate Decision | Tuesday, July 23, 2024 |
| Ghana Midyear Budget Presentation to Parliament by Finance Minister | Tuesday, July 23, 2024 |
| South Africa CPI for June 2024 | Wednesday, July 24, 2024 |
| Bank of Canada Interest Rate Decision | Wednesday, July 24, 2024 |
| US Q2 2024 GDP | Thursday, July 25, 2024 |
| Malawi Bank Rate Decision | Friday, July 26, 2024 |
Source: Various Economic Calendars, FT, Proshare Research
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Commodity Market
Global Commodities
The global commodity market ended the week on a bearish note. Crude oil futures traded lower for the week as a strong dollar and mixed economic signals weighed on investor sentiment. Brent crude and WTI dropped by -2.30% and -1.49% respectively. Similarly, prices of solid minerals dipped despite expectation on fed rate cut in September. Gold and Silver prices dipped -0.65% and -5.82%, respectively (See Table 1 below).
Table 1:
| Commodity | 19-Jul-24 | 12-Jul-24 | 29-Dec-23 | Weekly Chg | YTD Chg |
| Brent | 83.81 | 85.48 | 76.99 | -1.95% | 8.86% |
| WTI | 81.37 | 82.79 | 71.42 | -1.72% | 13.93% |
| Gold | 2,405.90 | 2,421.60 | 2,073.80 | -0.65% | 16.01% |
| Silver | 29.395 | 31.21 | 24.105 | -5.82% | 21.95% |
| Platinum | 976.90 | 1,013.50 | 1,006.70 | -3.61% | -2.96% |
| Palladium | 907.50 | 971.50 | 1,110.00 | -6.59% | -18.24% |
| CNBC, Proshare Research | |||||
*Data for July 19, 2024, is as of 05:26pm (Nigerian Time)
Local Commodities
AFEX commodity prices ended the week mixed. While Cashew and Soybeans fell by about -10%, Cocoa was up 23.79%, Maize increased 3.00%, paddy rice rose 2.77% while Sorghum gained 1.22% (See Table 2 below).
Table 2:
| AFEX Commodity Prices | |||
| Commodities | 19-Jul-24 | 12-Jul-24 | % Chg |
| Cocoa | 12100.00 | 9775.00 | 23.79% |
| Maise | 885.82 | 860.00 | 3.00% |
| Paddy rice | 698.85 | 680.00 | 2.77% |
| Sorghum | 819.85 | 810.00 | 1.22% |
| Ginger | 990.00 | 990.00 | 0.00% |
| Sesame | 2000.00 | 2000.00 | 0.00% |
| Wheat | 440.00 | 440.00 | 0.00% |
| Cashew | 1201.20 | 1330.08 | -9.69% |
| Soybeans | 739.98 | 840.00 | -11.91% |
AFEX, Proshare Research *Data for July 19, 2024, is as of 04:32 pm (Nigerian Time)
At the LCFE this week, EKO gold traded northward by 0.31%, closing at N88,120.00 per gram while Head rice stayed unchanged at N72,000.00 (see chart 3 below)
Table 3:
| LCFE Commodity Prices | |||
| Commodities | 19-Jul-24 | 12-Jul-24 | % Chg |
| Eko Gold | 88,120.00 | 87,850.00 | 0.31% |
| Head Rice | 72,000.00 | 72,000.00 | 0.00% |
LCFE, Proshare Research *Data for July 19, 2024, is as of 04:32 pm (Nigerian Time)
We expect market prices to exhibit a similar trend in the coming week.
Fixed Income Markets
Currency Market
FX demand pressure persisted this week, dragging the naira’s value against the dollar lower. The naira depreciated by 207bps week-on-week to settle at N1,597.92/US$1 on Friday from N1,563.80/US$1 last week (see Table 4 below).
Table 4: Naira/Dollar at NAFEM
| July 12, 2024 | July 19, 2024 | W-o-W% Change | |
| NAFEM | 1,563.80 | 1,596.92 | 2.07% |
Source: FMDQ, Proshare Research
Money Market
At the end of the week, system liquidity slightly improved, causing a moderation in interbank rates. The Open Repo Rate (OPR) and the Overnight rate (O/N) fell by 70bps and 133bps to 31.39% and 32.02% respectively (see Table 5 below).
Table 5: Money Market
| July 12, 2024 | July 19, 2024 | W-o-W % Change | |
| OPR (%) | 31.61 | 31.39 | -0.70% |
| O/N (%) | 32.45 | 32.02 | -1.33% |
Source: FMDQ, Proshare Research
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We expect higher rates next week as the FGN bond auction further mops up liquidity.
Nigerian Treasury Bill
The tight liquidity intensified selloffs and kept demand muted at the Nigerian treasury bill market this week. Week-on-week, the average benchmark yield rose by 398bps (W-o-W) to 24.55%.
The low subscription at the OMO auction trickled to the secondary market. The market experienced selloffs, pushing the average benchmark yield to 23.83% by 85bps week-on-week from 23.63% last week (see Table 6 below).
Table 6: Average Benchmark Yields of the Treasury Bills Market
| July 12, 2024 | July 19, 2024 | W-o-W % Change | |
| T. Bills (%) | 23.61 | 24.55 | 3.98% |
| OMO bills (%) | 23.63 | 23.83 | 0.85% |
Source: FMDQ, Proshare Research
We expect a quiet market as illiquidity persists and investors focus on the FGN bond auction.
FGN Bond Market
This week, the bond market witnessed muted demand and relative selloffs across the yield curve. The tight liquidity and higher June inflation figures strengthened selloffs, with the average benchmark yield rising by 83bps week-on-week to 19.36% from 19.20% last week (see Table 7 below).
Table 7: Average Benchmark Yields of the FGN Bonds
| July 12, 2024 | July 19, 2024 | W-o-W % Change | |
| Short Tenor | 20.21 | 20.36 | 0.74% |
| Mid Tenor | 19.35 | 19.57 | 1.14% |
| Long Tenor | 18.07 | 18.17 | 0.55% |
Source: FMDQ, Proshare Research
We expect selloff sentiment to persist as investors seek assets with higher returns to cushion inflation.
Equity Market
- With cherry-picking in some blue-chip stocks, the Nigerian bourse rose in four of the five trading sessions to end the week positively, reversing the previous week’s losses.
- The benchmark All-Share Index (ASI) rose +0.87% to close at 100,539.40 points from 99,671.28 points the previous week (see chart 1 below).
Chart 1: Movement of NGXASI Index December 29, 2023 – July 19, 2024
Source: NGX, Proshare Research
- Investors gained N320.84bn as market capitalisation rose to N56.93trn from N56.44trn in the previous week.
- The market’s rise was driven by gains in AIRTELAFRI (+4.76%), ACCESSCORP (+1.84%), UCAP (+42.78%), NAHCO (+9.44%), and OANDO (+11.28%), which offset the losses in GTCO (-1.21%), ZENITH BANK (-0.13%), FBNH (-0.90%), NGX (-8.37%), and VITAFOAM (-10.38%).
- Of the Twenty-three indices under our coverage for the week, thirteen indices appreciated, led by the NGX AFR Div Yield Index; eight indices closed negatively, led by the NGX Insurance Index, while two closed flat (see Table 8 below).
Table 8: Sectoral Index Performance as of July 19, 2024(%)
| INDEX | WTD | MTD | QTD | YTD |
| NGX AFR Div Yield Index | 8.90 | 13.2 | 13.2 | 62.44 |
| NGX MERI Growth Index | 2.46 | 3.87 | 3.87 | 4.86 |
| NGX-Main Board Index | 1.38 | 1.40 | 1.40 | 37.48 |
| Proshare Toni Index | 1.35 | 1.18 | 1.18 | 158.34 |
| NGX Pension Index | 1.11 | 0.39 | 0.39 | 16.53 |
| NGX MERI Value Index | 1.06 | -0.14 | -0.14 | 34.01 |
| NGX 30 Index | 1.02 | 0.23 | 0.23 | 33.28 |
| NGX Pension Board Index | 0.91 | 0.48 | 0.48 | 36.02 |
| NGX All-Share Index (ASI) | 0.87 | 0.48 | 0.48 | 34.46 |
| NGX CG Index | 0.52 | 0.49 | 0.49 | 1.37 |
| NGX Lotus II | 0.36 | 0.22 | 0.22 | 36.40 |
| NGX Industrial Goods Index | 0.08 | 0.35 | 0.35 | 73.75 |
| NGX Premium Index | 0.06 | -0.98 | -0.98 | 35.15 |
| NGX ASeM Index | 0.00 | 0.00 | 0.00 | 135.25 |
| Proshare Samad Index | 0.00 | 0.00 | 0.00 | 68.52 |
| NGX Banking Index | -0.05 | 1.66 | 1.66 | -5.93 |
| NGX-AFR Bank Value Index | -0.07 | 1.88 | 1.88 | -7.22 |
| NGX Oil/Gas Index | -0.10 | 4.33 | 4.33 | 44.10 |
| Proshare Gote Index | -0.13 | -0.22 | -0.22 | 87.29 |
| NGX Consumer Goods Index | -0.20 | -0.97 | -0.97 | 39.68 |
| NGX Growth Index | -0.43 | 2.67 | 2.67 | -9.11 |
| NGX Sovereign Bond Index | -4.35 | -4.35 | -4.35 | -3.56 |
| NGX Insurance Index | -4.86 | -3.05 | -3.05 | 17.71 |
CORPORATE EARNINGS RESULT FOR THE WEEK ENDED 19-07-2024
Of the seven corporate earnings released for the week, all but NSLTECH Q1 2024 reported growth in revenue and PAT, while CHAMPION Plc reported a notable drop in PAT in H1 2024 (see Table 9 below).
Table 9:
| S/N | Ticker | Period | Current revenue (m) | Previous revenue (m) | % Chg Revenue | Current PAT (m) | Previous PAT (m) | % Chg PAT |
| 1 | ENAMELWA | FY 2024 | 718 | 227 | 216.04% | (2,598) | (1,686) | 54.08% |
| 2 | CHAMPION | H1 2024 | 9545 | 5,706 | 67.28% | (387) | 29 | -1429.97% |
| 3 | UPCAP | H1 2024 | 15,148 | 11,014 | 37.53% | 7,737 | 4,689 | 65.00% |
| 4 | LIVINGTRUST | H1 2024 | 1752 | 1,294 | 35.39% | 424 | 232 | 82.76% |
| 5 | MULTIVERSE | H1 2024 | 380 | 284 | 34.06% | 178 | 81 | 119.87% |
| 6 | NSLTECH | H1 2024 | 2,130 | 1,655 | 28.71% | (62) | (3) | 1879.42% |
| 7 | NSLTECH | Q1 2024 | 1,040 | 3,496 | -70.25% | (33) | (188) | -82.18% |
NASD OTC EXCHANGE – Unlisted Equities
- The benchmark NASD Securities Index (NSI) fell -0.61% to close at 1,483.28 points from 1,492.39 points the previous week, while market capitalisation fell to N2.03trn.
- The negative performance was driven by losses in ARADEL HOLDINGS (-0.41%), GEO-FLUIDS PLC (-1.96%), FOOD CONCEPTS (-9.77%), 11 PLC (-9.98%) and FMB (-10.00%) outweighing the gains in PREI (+19.84%), AFRILAND PROPERTIES (+0.95%) and FC WAMPCO (+0.11%) (see table 10 below).
Table 10: NASD W-o-W Change
| Parameter | July 12, 2024 | July 19, 2024 | W-o-W Changes (%) |
| NASD NSI | 1,492.39 | 1,483.28 | -0.61% |
| Mkt Capitalization (N’bn) | 2,045.1 | 2,032.6 | -0.61% |
| Volume Traded | 231,290,608 | 5,688,332 | -97.54% |
| Value Traded (000) | 5,466,827.18 | 2,553,943.053 | -53.28 |
| Deals Executed | 136 | 144 | 5.88% |
Source: NGX, Proshare Research
Proshare Indices
The Gote Index declined -0.11% w-o-w as the loss in DANGSUGAR outweighed the gains made in NASCON (see Table 11 below).
Table 11: Gote Index W-o-W
| Company | July 12, 2024 | July 19, 2024 | W-o-W Changes (%) |
| DANGSUGAR | 41.60 | 40.45 | -2.76% |
| NASCON | 35.00 | 35.40 | 1.14% |
| DANGCEM | 656.70 | 656.70 | 0.00% |
| Total | 343.73 | 343.36 | -0.11% |
Source: NGX, Proshare Research
On the contrary, the Toni index gained +1.87% on notable gains registered in TRANSCORP, AFRIPUD, UCAP and UBA (see Table 12 below).
Table 12: Toni Index W-o-W
| Company | July 12. 2024 | July 19, 2024 | W-o-W Changes (%) |
| UCAP | 28.40 | 40.55 | +42.78% |
| AFRIPRUD | 7.40 | 9.90 | +33.78% |
| TRANSCORP | 11.70 | 12.00 | +2.56% |
| UBA | 22.75 | 22.85 | +0.44% |
| TRANSPOWER | 373.90 | 373.90 | 0.00% |
| TRANSCOHOT | 98.40 | 98.40 | 0.00% |
| Total | 1277.46 | 1301.39 | +1.87% |
Source: NGX, Proshare Research
Samad Index
The Samad Index maintained its weekly flat close (see Table 13 below).
Table 13: Samad Index W-o-W
| Company | July 12, 2024 | July 19, 2024 | W-o-W Changes (%) |
| BUA CEMENT | 143.20 | 143.20 | 0.00% |
| BUA FOOD | 379.90 | 379.90 | 0.00% |
| Total | 364.34 | 364.34 | 0.00% |
Source: NGX, Proshare Research
We expect a largely bullish leaning in the coming week.
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