Weekly Economic & Market Update – Equity market Outlook (Sept 10th – 14th)

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CPI spikes across Emerging Economies

There was a spike in Consumer Price Index (CPI) across emerging economies in the month of July 2018, as the average CPI (which measures inflation rate) of emerging economies prints at 3.4% compared to 3.1% recorded in the previous month.

According to the latest Organisation for Economic Cooperation and Development (OECD) Consumer Price Index report on member nations, the inflation rate in the
month of July 2018 nudged up remarkably in Argentina (31.2% from 29.5%), India (5.6% from 3.9%) and South Africa (5.0% from 4.4%), while the rate rose moderately in China (2.1% from 1.9%), Russia (2.5% from 2.3%), Brazil (4.5% from 4.4%), Indonesia (3.2% from 3.1%) and Saudi Arabia (2.2% from 2.1%).

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While average food price inflation rate remains stable at the previous month level of 1.8%, energy price inflation rate spiked by 700bps from 10.4% in the month of
June to 11.1% in July. The spike in the energy price inflation rate was majorly driven by the steady rise in crude oil price caused by supply shortage due to output disruption in Libya, Venezuela, Angola and Norway and the appreciation of the USD (used for c.65% of total global trade) against other major currency baskets.

We see inflation rate maintaining the current high levels across emerging economies in the short-to-medium term as supply shortage of crude oil in the international market is expected to keep crude oil price above $70pbl threshold for the remaining part of 2018.

Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur

South Africa slips into technical recession

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According to the latest Q2 GDP report released by Statistics South Africa (SSA), South Africa, Africa’s second largest economy by GDP size has slipped into
technical recession following a second consecutive contraction in GDP size. The GDP contracted by 0.7% in Q’2 18, after an earlier contraction of 2.2% in Q1’ 18.

There was a contraction in major sectors such as Agriculture, Forestry and Fishing (-29.2%), Transport, Storage and Communication (-4.9%), Trade, Catering and
Accommodation (-1.9%) and Manufacturing (-0.3%), while Mining (4.9%) and Construction (2.3%) recorded expansion.

The downturn in the Agricultural sector was largely driven by a decline in the production of field crops and horticultural products due to continued drought
conditions in Western Cape and severe hailstorm in Mpumalanga which destroyed several farm crops. Transport industry contracted largely as a result of decreased activity in both land and air transport, while trade and manufacturing contacted due to subdued sales and fall in production equipment.

U.S. added 201,000 to non-farm payroll in August

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According to the U.S. Bureau of Labour Statistics (BLS) report for the month of August 2018, the U.S. added 201,000 individuals to non-farm payroll employment
in various sectors to keep the unemployment rate at a low of 3.9%. This comprised of Professional & Business Services (53,000), Healthcare (33,000), Wholesales trade (22,000), Transport & Warehouse (20,000), Mining (6,000), Construction (23,000) and other sectors (44,000).

We believe the recent trend in the U.S. labour market could be attributed to the corporate tax cut (from 35% to 21%) and the several trade protectionism policies by the Trump led administration. However, we believe this might spike U.S. inflation rate in the medium-to-long term due to a spillover effect from the ongoing trade war between the U.S. and her major trade partner, China.

Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur


Nigeria’s Q2’ 18 Foreign Trade value shrink by 8.9% despite increased trade surplus

According to the foreign trade statistics report for Q2’ 18 released by the National Bureau of Statistics (NBS), the total value of Nigeria’s merchandise trade in Q2’ 18
shrank by 8.9% from ₦7.21 trillion in Q1’ 18 to ₦6.57 trillion. The contraction in total trade value in Q2’18 was mainly driven by the decline in both imports and exports commodities.

Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur

The value of commodities imported in Q2’ 18 fell by 16.3% from ₦2.52 trillion in Q1 to ₦2.11 trillion. This can be largely attributed to the various government
policies targeted at promoting consumption/usage of locally produced commodities. However, despite recording 8.4% increase in trade surplus (from ₦2.17 trillion in Q1 to ₦2.36 trillion), the value of export earnings fell by 4.9% from ₦4.69 trillion in Q1’ 18 to ₦4.46 trillion.

Crude oil exports value rose by 4.2% from ₦3.58 trillion in Q1 to ₦3.73 trillion in Q2. This can be attributed to the increase in crude oil price from an average of
$64pbl in Q1 to $72pbl in Q2. Conversely, Non-crude oil and Non-oil exports value fell by 34% and 62.2% respectively. This was majorly driven by the decline in exports
value of Manufactured Good (83.9% q/q), Solid Mineral Goods (26.0% q/q) and Other Oil products (3.6%).

It is also worthy to note that India has overtaken the Netherlands as Nigeria’s major exports destination. The size of Nigeria’s total exports value to India was ₦87.33 billion (16.19%), while exports value to the Netherlands stood at ₦36.35 billion (10.25%).

In Q3, we expect the value of total merchandise trade to improve slightly due to increase in price and output level of crude oil; trade surplus to be maintained; imports and exports value to expand slightly due to seasonality.

Power generation level dropped 12% in Q2’18

Read Also:  Equity market reveres downtrend to gain 0.05%

The average total power generation in Nigeria dropped by 12% in Q2’ 18 for the Q1 level of 92,747MWH to 81,561MWH. This is according to the power sector report
released by the National Bureau of Statistics (NBS).

Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur

The Thermal generation plants (gas) recorded the highest decline of 13%, falling from 6.75m MWH in Q1’18 to 5.88m MWH in Q2 while Hydro plants power
generation fell by 3% from 1.59m MWH in Q1’18 to 1.54m MWH in Q2. The highest daily energy generated in the period was 77,010MWH (recorded on 18th April), which was 27% lower compared to the peak of 105,755MWH recorded on 14th March 2018.

However, there were only three (3) cases of power generation collapse in Q2 compared to seven (7) recorded in Q1. This indicates a 57.14% improvement in the number of power generation system collapse cases. The total number of customers with prepaid meters also increased slightly by 1.59% to 1.62 million customers in
Q2’18 from 1.59 million in Q1’18.

Business Confidence Index (CI) maintained positive macroeconomy outlook

According to the CBN Monthly Business Expectations Survey Report (BESR) for the month of August 2018, business overall Confidence Index (CI) on macroeconomy improved from the July level of 13.6 index points to 21.5 index points in August, and projected to print at 61.6 index points in the month of

Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur

The optimism on the macroeconomy in the current month was driven by opinion of respondent from services (13.7 points), Industrial (6.1 points), wholesale/retail trade (0.9 points) and construction (0.8 points) sectors, while the drivers of the optimism for the month of September were services (36.0 points), industrial (19.2
points), wholesale/retail trade (4.2 points) and construction (2.2 points).

Read Also:  Equity market reveres downtrend to gain 0.05%

However, insufficient supply of electricity (66.0 points), high-interest rate (57.0 points), financial problems (54.9 points), unfavourable economic climate (54.8
points), vague economic laws (48.1 points), unfavourable political climate (46.0 points) and access to credit (42.2 points) were major factors identified as major
constraints affecting businesses in the country.


Equity market continues free fall, sheds 0.21% on Friday to close a bleak week

The equity market on Friday continued its free fall as selloff pressure drove the market to shed 0.21%. The ASI sank further after a major rally on Tuesday to close the week at 34,037.91 index points, while market capitalisation closed at ₦12.426 trillion.

Market breadth for the week closed negative, recording 93 gainers, 108 losers and 333 unchanged in 534 traded stocks.

Top among the losers on Friday are: LAWUNION (-10.00%), WEMABANK (-9.52%), UBN (-9.40%), STDINSURE (-9.38%), EQUITYASUR (-9.09%), ZENITHBANK (-0.48%), DANGCEM (-0.45%) among others.

Conclusively, the market this week recorded a total turnover of 892.72 million shares worth ₦13.07 billion in 15,607 deals.

We guide investors to trade cautiously in the short term amidst continued selloff. However, we believe investors can take advantage of the current cheap price(s) of stocks with strong fundamentals in order to reap medium-to-long term benefits.

Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur


Strong liquidity persisted in the inter-bank market this week as the Overnight lending rate closed for the week at 3.42%, shedding 341bps w/w, while the Open
Buy-Back (OBB) rate shed 317bps w/w to close at 2.83%. The strong liquidity was aided by inflows from matured OMO bills to the tune of ₦452 billion, worsened
by persistent liquidity from the previous week “No OMO auction” and FAAC allocation. These put together overshadowed the $210 million CBN FX sales on
Tuesday, while OMO auction was put on hold for the second week running.

However, the CBN on Friday conducted a late mop-up, injecting $303 million into the secondary market and CNY46.58 million into the FX market.

In the next trading week, there will be fresh inflows of ₦240 from maturing OMO instrument, and we expect the CBN to continue the usage of FX sales liquidity mop-up approach to check excess liquidity given investors recent resistant to OMO instrument.


Activities in the Treasury bills market this week ended on a bearish note as average yield across the curve appreciated by 78bps from the previous day level. Weak
demand by market players led to an upward review in offer rate, mostly the 91 days and 182 days maturing bills.

In the next trading week, specifically on Thursday 13th September 2018, we expect the CBN to offer for sale, 91 days,182 days and 364 days Treasury bills instrument to rake-in excess liquidity.


The Naira this week weakened against the USD both in the CBN official and I&E FX window. The official rate fell by 0.02% w/w to close the week at ₦306.20/USD
as against the previous week closing rate of ₦360.15/USD, while the pair fell by 0.13% w/w at the I&E windows to close at ₦362.78/USD as against ₦362.32/USD last Friday.

In the meantime, the foreign reserves this week fell by $370 million from last Friday’s level of $45.838 billion to close the week at $45.468 billion.


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Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand SpurWeekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur

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Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand SpurWeekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur

Latest News

Hong Kong ICT Awards 2021 opens for enrolment

HONG KONG SAR - Media OutReach - 23 April 2021 - The Hong Kong ICT Awards (HKICTA) 2021 is open for enrolment today (April 23). Entries of locally developed information and communications technology (ICT) products and solutions are invited to compete for the Grand Awards in the eight award categories, and the top accolade of the competition - the Award of the Year. The deadline for enrolment is July 16, 2021.

Steered by the Office of the Government Chief Information Officer (OGCIO), the HKICTA 2021 is organised by eight local industry associations and professional bodies. The award categories and respective Leading Organisers are listed below:

Award Categories

Leading Organisers

Digital Entertainment Award

Hong Kong Digital Entertainment Association

FinTech Award

The Hong Kong Institute of Bankers

ICT Startup Award

Hong Kong Wireless Technology Industry Association

Smart Business Award

Hong Kong Computer Society

Smart Living Award

Hong Kong Information Technology Federation

Smart Mobility Award

GS1 Hong Kong

Smart People Award

The Hong Kong Council of Social Service

Student Innovation Award

Hong Kong New Emerging Technology Education Association

A Grand Award will be granted in each category. A Grand Judging Panel, to be led this year by the President of the Hong Kong University of Science and Technology, Professor Wei Shyy, will select the Award of the Year from the eight Grand Awardees.

Since its debut in 2006, the HKICTA has endeavoured to recognise and promote outstanding ICT inventions and applications, thereby encouraging the pursuit of innovation and excellence among Hong Kong's ICT professionals and enterprises to meet business and social needs, bring benefits to the community through adoption of innovation and technology, and foster Hong Kong's smart city development together.

Details of the HKICTA are available on the thematic website (www.hkictawards.hk). Enquiries can be made to the OGCIO at 2582 4318 or by emailing [email protected]

Weekly Economic & Market Update - Equity market Outlook (Sept 10th - 14th) - Brand Spur
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