This is Ugodre’s weekly outlook for the week ending November 11, 2017.
The Week from the rear view;
- The Central Bank of Nigeria released its September Purchasers Managers Index, with the Manufacturing PMI at 55%, above 50% for the 7th month in a row. The key indicators on the Manufacturing PMI, Production Level, New Orders, Supply Delivery time, Employment level and Raw material levels all rose above 50%.
- Non-Manufacturing PMI, at 55.3% has also risen for the 6th consecutive month.
- The Nigerian Stock Exchange closed the month of October on a positive note, gaining 3.5%. This is the first positive gain for October since 2013. The index is up 37.45%, one of the highest in the world.
- The index also started the month of November with a romp closing at 1.31%
- The earnings season is over for now as investors look forward to the next instalment in February of 2018.
- Last week, the President sent a letter to the national assembly informing them of his intention to present the 2018 budget on Tuesday. There was a reported uproar in the house as members asked about the 2017 budget which is no were close to being implemented as requested.
- Brent Crude Price crossed $60 last week and remained above this price by Friday as global crude oil demand outweigh supply. The Niger Delta militants perhaps watching this closely, also announced plans to restart bombings if its demands are not met. They want a larger control of the natural resources. Some claim this is election related.
- Bitcoins price hit an all time high last week crossing $7,500. The so-called burst some have predicted appears not to be happening anytime soon.
Outlook for the week
- The Stock Market rally that ensued last week is likely to continue as investors divert funds into the capital market from the fixed income markets. Treasury Bills yield have started dropping so investors will look to the market for yields.
- News that oil prices is rising as well as the recent addition of Nigeria in the MSCI index is also a positive sign for most investors and is likely influencing the bullish ride.
- Just to add that November has typically been bad for stocks, having closed negatively every year since 2014. But October was like that too and still closed positively.
- Two major offers are likely to debut this week. The Flour Mills rights issue and the Lafarge rights issue. They intend to raise a combined N200b from the capital market.
- The Debt Management Office will issue for sale its FGN Savings Bonds for the month on the 6th of November (Monday). The offer will close on Friday the 10th. Interest rates are typically, between 10%-13%.
- Investors in bitcoins should expect prices to continue rising this week. It’s the best asset this year and looks likely to hit $10k by January. Nigerians looking to invest in bitcoins and other cryptocurrencies can do so from the comfort of their homes.
- Diamond Bank confirmed on Friday that it is divesting its 97.7% ownership of its investment in Diamond SA. This is part of their plans to exit from its foreign operations and focus on the local market. They also own, Diamond Bank UK.
Stocks to watch this week
- Diamond Bank – Sell pressure following sting of negative news.
- Dangote Flour – Looks bullish as investors pour in following its return to positive retained earnings. Whatever it is Dangote is doing here is astonishing.
- Stanbic – When will the ride end. For now, it’s no stopping them
- Zenith Bank shares at trading at 5x looks quite cheap compared to GTB at 8x earnings. Zenith should be trading at 7x earnings
- It is a busy week for the NBS this week as they plan the release of several interesting reports.
- Some of the reports we are keen on seeing are the household expenditure report for the 3rd quarter of 2017. The social statistics report for 2016 is also expected this week.
- Others are E-payment channels, electricity statistics and railway data.
- The exchange rate is likely to remain at N360 as the CBN’s external reserves strengthen.
- There are a few publications still expected from the CBN and we won’t be surprised to get their much awaited 2016 annual report.
- The US have a new Federal Reserve Chair. President Trump named Jeff Powell, a non-economist, as his choice, removing the democrat Janet Yellen. The markets seem to like this and reacted positively. This perhaps is good news for Nigeria as it means the FED is likely to do all it can to keep global market positive.
- Oil prices? Well, with the slew of corruption charges against billionaires in Saudi, resignation of Lebanon Prime Minister Hariri and the tough rhetoric coming out of the middle east, oil price is more likely to rise than drop
- Donald Trump is also in the Asia and one can trust him to spook the region with one of his trademark tweets.
- We still have one eye at events in the Niger Delta and hope it doesn’t get out of hand. We need to ride this wave.
Insecurity: FG to implement town hall meetings to reach a national consensus
The meetings are set to address the twin issues of insecurity and its concomitant effect on national unity and cohesion.
The Federal Government announced the launch of town hall meetings to address the twin issues of insecurity and its concomitant effect on national unity and cohesion.
This was disclosed by the Minister of Information, Lai Mohammed, at the Town Hall Meeting in Kaduna on Thursday, themed “Setting Benchmarks for Enhanced Security and National Unity in Nigeria.”
What the Minister is saying
“The correct starting point towards addressing these myriads of problems is the building of an “elite consensus” on the security, unity, indissolubility, and peaceful existence of Nigeria.
“Such elite consensus had worked in the past. Can we make it work now and proffer solutions in order to stave off the threats to our unity as a nation?” he said.
The Minister disclosed that the meetings are necessary to bring all critical stakeholders together to deliberate on the issues and possibly reach a consensus on the way forward.
“We expect this Town Hall meeting to develop concrete, implementable resolutions because a lot of talks and postulations had taken place with little or no requisite outcome.”
In case you missed it
- Former Vice President, Atiku Abubakar warned that the rising insecurity in Nigeria is a result of rising youth unemployment. He urged Nigeria to tackle out-of-school children cases, pay a monthly stipend to poorer families, incorporate youths who are above school age into massive public works programmes and others.
- Senator Ali Ndume insisted that the Federal Government needs to increase its total military spending to be able to tackle the rising insecurity in Nigeria which has seen a number of school students in 2021 kidnapped by bandits.
IMF lifts 2021 global GDP growth to 6%
The group also warned that economic recoveries are diverging dangerously across and within countries.
The International Monetary Fund has lifted its global growth outlook to 6% in 2021 (0.5% point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3% in 2020 due to the effects of the COVID-19 pandemic. This disclosure was made on the organisation’s website on Tuesday.
The group also warned that economic recoveries are diverging dangerously across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliance on tourism do less well.
What the IMF is saying
“The upgrades in global growth for 2021 and 2022 are mainly due to upgrades for advanced economies, particularly to a sizeable upgrade for the United States (1.3 percentage points) that is expected to grow at 6.4 percent this year.
This makes the United States the only large economy projected to surpass the level of GDP it was forecast to have in 2022 in the absence of this pandemic.
China is projected to grow this year at 8.4 percent. While China’s economy had already returned to pre-pandemic GDP in 2020, many other countries are not expected to do so until 2023.”
On divergent recoveries
The IMF stated that divergent recovery paths are likely to create wider gaps in living standards across countries compared to pre-pandemic expectations.
“The average annual loss in per capita GDP over 2020–24, relative to pre-pandemic forecasts, is projected to be 5.7 percent in low-income countries and 4.7 percent in emerging markets, while in advanced economies the losses are expected to be smaller at 2.3 percent,” they said.
“Faster progress with vaccinations can uplift the forecast, while a more prolonged pandemic with virus variants that evade vaccines can lead to a sharp downgrade. Multispeed recoveries could pose financial risks if interest rates in the United States rise further in unexpected ways.“
For Africa, IMF forecasts economic growth of 3.4% in 2021 and 4% by 2022, Nigeria is expected to grow by 2.5% in 2021 and 2.3% by 2022, while South Africa is projected to hit growths of 3.1% and 2.0% for the respective years in focus.
In case you missed it
The International Monetary Fund (IMF) identified some factors that hamper the economic recovery of low-income countries from the devastating impact of the coronavirus pandemic, factors including access to vaccines, limited policy space to respond to the crisis, the lack of means for extra spending, pre-existing vulnerabilities such as high levels of public debt in many low-income countries and sometimes weak, negative, total factor productivity performance in some low-income countries. These factors continue to act as a drag on growth.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Cornerstone Insurance Plc notifies stakeholders of late submission of financial statements.
- NSE approves delisting of 11 Plc shares.
- Berger Paints Nigeria Plc reports a 67% decline in Profits in FY 2020.
- MTN Nigeria raises N73.5 billion from CP Issuance to finance operations.
- Jaiz Bank proposes dividend worth N884 million for shareholders.