Global Markets & Economy
Relief Package Lifts Global Markets
World central banks continue to release stimulus packages to subdue the effects of COVID 19. The Reserve Bank of India is the latest to ease the policy rate among 87 other central banks that have slashed their rate thus far this year. Most appealing was the successful passage of the largest relief bill in the history of the US. The US Senate passed a $2trillion relief bill to provide improved unemployment insurance provisions, cash reliefs for adults and loans for businesses. This package follows two earlier bills that provided a combined sum of $108.3bn to provide free testing, unemployment benefits and food aid. There was a mild recovery in market rout on a w-o-w basis as China reports no new cases and US stimulus packages renew bullish sentiment in the US markets. S&P 500 and NASDAQ edged up +10.1% and +9.2% respectively. London's FTSE 100 (+4.9%), France's CAC 40 (+7.6%) and Germany's DAX (+7.8%) also improved. Japan's NIKKEI (+17.1%) and Hong Kong's Hang Seng (+2.9%) closed highr. Nigeria's All Share Index (-1.5%) outperformed only the Nairobi All Share Index (-4.2%) while underperforming Ghana's GSE (-0.8%), Tunisia's Tunix Index (+4.5%), South Africa's JSE (+6.1%) and Egypt's EGX 30 (+7.7%).
Domestic Economy
S&P Downgrades Nigeria's Rating to Junk Grade
Standard & Poor's (S&P), a leading credit rating agency downgraded Nigeria's long term credit rating from B to B- alongside other sovereigns, whose economies are exposed to shocks from declining oil prices. This follows the "negative" outlook downgrade issued a month earlier on the Nigerian economy. Fitch in turn downgraded Zenith, Guaranty and UBA to long term default rating 'B' and viability rating 'b' while assigning a Rating Watch Negative (RWN) to 10 banks.
FG to Reduce Revenue Expectations
The Federal Government will slash revenue target from privatization by 50% and Customs by 37% in its review of the 2020 budget and Medium Term Expenditure Framework following the downward revision of oil benchmark price to $30. These are fiscal measures to realign the budget with current market realities.
Domestic Market
EQUITIES MARKET
The equities market weakened -1.52% w-o-w as losses on Monday (-2.2%) outweighed the gains on Tuesday (+0.2%), Thursday (+0.1%) and today (+0.5%). NB (-15%), AFRIPRUD (-11%) & NESTLE (-10%) led bearish performance as the NSEASI declines -16.6% Month to Date and -18.6% Year to Date. Activity levels weakened week-on-week as volume (-48.0%) and value (-54.1%) of trades slumped to 1.4bn units and ₦14.9bn respectively. ZENITHBANK (316.5mn, ₦3.6bn) & GUARANTY (233.1mn units, ₦4.0bn) led trades by volume and value week-on-week.
INVESTORS SENTIMENT
Market breadth was adverse as 35 gainers and 30 losers emerged W-O-W. ETRANZACT (+28.8%) topped the gainers chart - WAPIC (+23.8%), CUTIX (+20.7%), MORISON (+20.0%) & NEIMETH (+20.0%). The losers were led by NB (-15.0%), AFRIPRUD (-11.2%), NESTLE (-10.0%), DANGSUGAR (-10.0%) and TOTAL (-10.0%).
SECTOR PERFORMANCE
Sectoral performance was mixed as 2 sectors gained and 3 declined week-on-week. Banking (+2.1%) improved due to gains in JAIZ (+17.8%) & STERLING (+13.5%). WAPIC (+23.8%) & NEM (+18.9%) improved the Insurance index (+3.3%). WAPCO (-7.9%) caused the slump in the Industrial Goods Index (-0.5%). Consumer Goods (-8.1%) was dragged by NB (-15.0%), NESTLE (-10.0%) & DANGSUGAR (-10.0%). TOTAL (-10.0%) & CONOIL (-9.9%) dragged the Oil & Gas Index (-2.2%)
MARKET INSIGHT AND OPPORTUNITIES
While the market continue to trade at attractive levels, buoyant demand from value investors bid up the prices of banking and insurance stocks. Investors reacted positively to the dividend declaration of STERLING (+13.5%). JBERGER leads the dividend yield table (following today's session - 12.5%. DANGCEM (12.3%), FIDELITYBK (11.1%) & ARDOVA (8.3%) trudged behind.
FIXED INCOME MARKET
Overnight rate and Open Buy Back advanced to 17.1% and 15.8% respectively as system liquidity tightened after issuance of 2035 and 2050 FGN Bonds. The secondary market continued its bearish trend yields rose by an average of +3bps on the sovereign yield curve excluding new issuances due to sell-offs on the mid-segment of the curve.