FX Market Liquidity Challenge to Remain a Drag on Capital Market Performance

The Nigerian Stock Exchange (NSE) held its annual Market Recap and Outlook briefing earlier this week on Thursday, 12th January. The presentation delivered by the CEO of the Exchange, Oscar Onyema, at the session offered investors an opportunity to gauge regulators perspectives of the sentiment drivers in 2016 and projections for performance, regulation and products in 2017.

Nigeria 2017 Budget Review: Optimistic Revenue Assumptions Underpin Ambitious Fiscal Target

During the week, President Buhari presented the 2017 FGN budget before the National Assembly. In line with expectation and similar to 2016, the budget is expansionary as government’s policy thrust to lift the economy from the current recession remains biased toward fiscal stimulus. Proposed expenditure for 2017 is N7.3tn, which is 20.4% larger than N6.1tn in 2016. Total revenue is projected at N4.9tn, 28.0% higher than N3.9tn in 2016 and fiscal deficit at N2.3tn – implying a deficit to GDP ratio of 2.2%to be financed by both domestic and foreign borrowings.

Contraction in Household Spending Drags Half Year 2016 GDP by Expenditure

The National Bureau of Statistics (NBS) late last month released Q1 and Q2 2016 GDP by expenditure data. Expectedly, the data showed the economy on a sticky wicket, which is in line with observations from supply side computations released for the two quarters much earlier in the year. However, the statistics give us a better view of structural and cyclical demand-side drivers of the business cycle.

Q3 2016 Trade Deficit Narrows on Currency Controls & Weaker FX Rate

The National Bureau of Statistics (NBS) released Q3: 2016 Foreign Trade Statistics on 1st December, 2016. The report showed Q-o-Q improvement in trade deficit which narrowed to the lowest in 2016 as impact of weaker exchange rate in the period inflated exports data (reported in Naira) while currency controls pared growth in imports. Trade deficit improved 78.5% Q-o-Q to N104.1bn from N484.2bn in Q2:2016 while Merchandise trade (sum of exports and imports) rose 16.3% Q-o-Q and 17.9% Y-o-Y to N4.7tn.

MPC Maintains Status Quo but Ignores Elephant in the Room

The Monetary Policy Committee (MPC) held its scheduled 6th and final meeting for 2016 on the 21st and 22nd of November. The conclusions from the two-day deliberations were broadly in consonance with our prognosis in the Pre-MPC note; “Blunted Policy Tools Call for Rollback of Administrative Measures” where we projected that the MPC will likely hold all rates constant whilst reinstating the need for the CBN’s hierarchy to properly implement currency market reforms in order to regain waning credibility.

Trump Victory Casts Shadow of Uncertainty over Global Investment

Despite the markets’ initial panic at Donald’s Trump’s election, stock markets have bounced backed with the hope of financial stimulus. However, confusion prevails and many questions remain about the new president’s plans for global trade and investment. 

Shares and currencies have fluctuated wildly in the wake of Donald Trump’s unexpected victory in the US presidential elections on November 8. This volatility reflects the fears surrounding the president-elect, whose campaign suggested a restructuring of the US and global economy in numerous ways.

Pre-MPC Note: Blunted Policy Tools Call for Rollback of Administrative Measures

Next week Monday and Tuesday (21st and 22nd November), the Monetary Policy Committee (MPC) of the CBN will be holding its 6th and last meeting in 2017 to review major developments in the global and domestic space in order to make vital policy decisions. Since the last MPC meeting held in September, the global risk landscape and policy outlook have changed dramatically, underlined by the emergence of Donald Trump as the President-elect of the United States and the resultant shockwave in the global bonds market, risk-on appetite in the US and underperformance of Emerging Markets assets.

Buhari Addresses Climate Change Conference in Morocco

President Muhammadu Buhari on Wednesday addressed the Climate conference and unveiled plans to issue green bonds to raise climate funds.

The country also planned to reduce emissions by 20 per cent by the year 2030, with the intention of raising the target to 45 per cent, with the support of the international community.

President Muhammadu Buhari raised the stakes on Tuesday in his statement at the 22nd Session of the Conference of Parties to the United Nations Framework Convention on Climate Change (COP22) taking place in Marrakech, Morocco.