Nigeria Market Performance

The inflation level in Nigeria continue on the Upward trajectory as it hits 22.04% . The March increase comes across as the third consecutive surge in the country’s inflation figure since the year began.

Market Performance

• The benchmark NGX All-Share Index (ASI) increased by 0.06% points to close at 54,936.11 representing a 1-week loss of 1%, a 4-week gain of 1.14%, and an overall year-to-date gain of 7.19%.

• Brent crude futures settled up $2.32 at $95.99 a barrel, extending a 1.1% rise from the previous session but falling 2.6% on the week.

• Naira remains unchanged as it closes at N409/$ w/w at the I &E window. The market participant maintains bids between N394 and N419.30 per dollar while the official rate of N379/$ remained unchanged. Also, in the parallel market, the Naira depreciated slightly by 0.42% or N2 to close at N745/$

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Business Headlines

• The annual inflation rate in Nigeria quickened for the third month to a 17-1/2-year high of 22.04% in March 2023, up from 21.91% in the prior month, amid a subdued currency due to the worsening cash crisis

• Nigeria’s constant fiscal deficit has worsened the nation’s public debt stock, with 96.3 per cent of government revenue spent on servicing debt in 2022- World bank

• Guaranty Trust Holding Company Plc recorded profit before tax of N214.2bn, representing 3.3 per cent dip from N221.5bn recorded in the corresponding year ended December 2021.

• The United Bank for Africa Plc recorded 47.5 per cent growth in its gross earnings in the first quarter of 2023. The Group’s profit before tax also hit N61.4bn.

• Dangote Sugar Refinery Plc says it will pay N18.22bn as dividends to shareholders for the year ended December 31, 2022, despite the economic headwinds that characterized 2022 financial period.

Global Headlines

• New data from the Swedish government forecasts GDP will contract more than expected, worsening an already “gloomy” outlook for the economy. Swedish GDP is now expected to contract by 1%, rather than 0.7%, according to government data.

• The dollar climbed to a one-month high against Japan's yen on Monday as traders eyed up another interest rate hike from the Federal Reserve, while the Bank of Japan stuck to its easy-money policies for now.

• Big global money managers got rid of a high volume of Chinese equities in recent days, while adding U.S. energy shares to portfolios at a near-record pace, according to a Goldman Sachs report.

News Analysis

Foreign Capital Investment inflow dropped 28% in Q1’2022, second decline since Q4’2020

The total value of capital importation into Nigeria in the first quarter of 2022 stood at US$1,573.14 million from US$2,187.63 million in the preceding quarter showing a decrease of 28.09%. When compared to the corresponding quarter of 2021, capital importation decreased by 17.46% from US$1,905.89 million. The largest amount of capital importation by type was received through Portfolio Investment, which accounted for 60.87% ($957.58 million). This was followed by Other Investment with 29.28% (US$460.59 million). Foreign Direct Investment (FDI) accounted for the smallest portion, 9.85% ($154.97 million) of total capital imported in Q1 2022. FDI was halved when compared with the Q4’2021 ($358 million). The report reveals that only 6 state (Lagos, Abuja, Anambra, Oyo, Katsina and Plateau) attracted foreign investment in Q1’2022 as against 7 states in the previous quarter.

The decline in capital importation was induced by forex scarcity, increased insecurity issues among others in first quarter. Further, a pre-election year, with its countless uncertainties, is not the best time to expect an influx of foreign investments.