Economy
Inflation Rate to Further Drop to 16.13% on Base Effect
By FSDH Research
We expect the May 2017 inflation rate (year-on-year) to drop to 16.13 percent from 17.24 percent recorded in the month of April 2017.
The drop is expected to come mainly as a result of base effect from the increase in the pump price of Premium Motor Spirit (PMS) in May 2016 despite the elevated consumer prices recorded in May 2017.
The sharp increase in the prices of consumer goods in May 2017 show that inflationary pressure persists in Nigeria.
Based on the data release calendar on the National Bureau of Statistics (NBS) website, we expect the NBS to release the inflation rate for the month of May 2017 on June 15, 2017.
The monthly Food Price Index (FPI) that the Food and Agriculture Organization (FAO) released today shows that the Index rebounded in May 2017 following three months of consecutive decline. The Index averaged 172.6 points, 2.19 percent higher than the revised value for April 2017, as all the sub-indices increased except sugar.
The FAO Dairy Price Index increased by 5.15 percent in May, as prices for all categories of dairy products were on the increase.
The FAO Vegetable Oil Price Index was up by 4.74 percent, primarily driven by increase in both palm and soy oil prices occasioned by the rising global imports demand, low inventories and robust consumption particularly in the United States. The prices of meat have continued to trend upward since the beginning of the year 2017. The FAO Meat Price Index was up 1.47 percent as prices for pig, bovine and ovine meat all increased, while those of poultry meat were stable.
The FAO Cereal Price Index was up by 1.40 percent, largely on account of the increase in the prices of wheat and rice.
Meanwhile, the price of maize was modest due to large global supply. On the flip side, the continued fall in the price of sugar due to the weak global import demand, improved supply conditions in the main sugar producing regions in Brazil and the sudden depreciation in currency of the Brazilian Real weighed on the sugar Index.
Hence, the FAO Sugar Price Index fell by 2.31 percent in May 2017 to a 13-month low.
Our analysis indicates that the value of the Naira appreciated at both the inter-bank and parallel market.
The Naira gained 0.15 percent and 3.66 percent to close at N305.40/$ and N382/$ at both the inter-bank and parallel market at the end of May 2017 respectively. The appreciation in the Naira is expected to have countered the effect of the rising prices of food at the international market to certain extent. This should lead to a moderation in the pass through effect of imported prices on consumer goods in Nigeria.
The prices of most of the food items that FSDH Research monitored in May 2017 increased substantially. The prices of tomatoes, Irish potatoes, yam, meat, rice and sweet potatoes were up by 88.16 percent, 36.8 percent, 32.42 percent, 4.76 percent, 2.54 percent and 0.6 percent respectively.
Meanwhile, the prices of onions, vegetable oil, beans, garri and fish were stable. The movement in the prices of food items during the month resulted in 2.5 percent increase in our Food and Non-Alcoholic Index to 240.28 points.
We also noticed increase in the prices of Housing, Water, Electricity, Gas & Other Fuels divisions between April 2017 and May 2017.
Our model indicates that the general price movements in the consumer goods and services in May 2017 would increase the Composite Consumer Price Index (CCPI) to 230.30 points, representing a month-on-month increase of 1.78 percent.
We estimate that the increase in the CCPI in May 2017 would produce an inflation rate of 16.13 percent lower than the 17.24 percent recorded in April 2017.
Source: FSDH Research
By Adedapo Adesanya
Four securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.95 per cent on Friday, erasing N41.17 billion from the bourse, which had its market capitalisation at N2.567 trillion compared with the previous session’s N2.618 trillion.
In the same vein, the NASD Unlisted Security Index (NSI) decreased at the close of business by 85.28 points to 4,277.07 points from 4,362.32 points.
The price decliners were led by 11 Plc, which gave up N20.50 to sell at N200.50 per share compared with the preceding day’s N221.00 per share, FrieslandCampina Wamco Nigeria Plc dropped N16.94 to close at N155.20 per unit versus Thursday’s closing price of N172.14 per unit, Central Securities Clearing System (CSCS) Plc went down by N2.11 to N84.68 per share from N86.79 per share, and Afriland Properties Plc lost 11 Kobo to end at N16.74 per unit, in contrast to the N16.85 per unit it closed a day earlier.
During the trading day, the value of transactions jumped by 172.1 per cent to N29.9 million from the preceding session’s N10.9 million, and the volume of trades soared by 136.5 per cent to 955,096 units from the previous 403,901 units, while the number of deals went down by 11.4 per cent to 31 deals from 35 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 68.6 million units sold for N4.7 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Dipo Olowookere
The last trading session of this week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note, with a 0.66 per cent loss on Friday.
This was influenced by sustained selling pressure and cautious trading, which forced investors into profit-taking.
Data obtained by Business Post showed that the energy sector fell by 4.66 per cent, the insurance counter dipped by 2.23 per cent, the consumer goods index depreciated by 0.96 per cent, and the banking segment shed 0.28 per cent, while the industrial goods space remained unchanged.
At the close of business, the All-Share Index (ASI) of Nigeria’s stock exchange went down by 1,531.81 points to 232,049.02 points from 233,580.83 points, and the market capitalisation dropped N983 billion to settle at N148.905 trillion compared with Thursday’s N149.888 trillion.
Aradel was the worst-performing equity after it lost 10.00 per cent to close at N1,417.50. International Energy Insurance slipped by 9.95 per cent to N5.79, Trans-Nationwide Express depreciated by 9.89 per cent to N3.28, eTranzact crashed by 9.79 per cent to N14.75, and UPDC slumped by 9.72 per cent to N28.12.
The best-performing equity for the day was Universal Insurance, which gained 6.32 per cent to close at N1.01, McNichols grew by 5.52 per cent to N8.60, Linkage Assurance expanded by 4.67 per cent to N1.57, NGX Group appreciated by 4.35 per cent to N120.00, and Transcorp increased by 3.62 per cent to N41.50.
As look at the activity level indicated that investors traded 388.7 million stocks worth N18.4 billion in 44,631 deals compared with the 393.7 million stocks valued at N19.2 billion executed in 45,813 deals a day earlier, representing a decline in the trading volume, value, and number of deals by 1.27 per cent, 4.17 per cent, and 2.58 per cent, respectively.
By Adedapo Adesanya
The Naira recorded a loss of 82 Kobo or 0.06 per cent against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 26, exchanging at N1,380.93/$1, in contrast to the previous day’s rate of N1,380.11/$1.
Equally, the domestic currency further weakened against the Pound Sterling in the official FX market yesterday by N6.06 to settle at N1,824.90/£1 versus the preceding session’s N1,818.84/£1, and lost N10.74 on the Euro to sell at N1,577 .58/€1 versus N1,566.84/€1.
At the GTBank forex counter, the Naira depreciated against the greenback during the session by N4 to close at N1,387/$1, in contrast to Thursday’s value of N1,383/$1, and at the parallel market, it was unchanged at N1,395/$1.
Interbank FX activity among financial institutions has fluctuated amid a sharp slowdown in forex market interventions by the Central Bank of Nigeria (CBN), as it allows demand and supply to move the market.
Also, a stronger greenback has generally put significant pressure on emerging-market currencies.
Nigeria has accessed the first tranche of a proposed $5 billion derivatives financing arrangement with First Abu Dhabi Bank PJSC, the largest lender in the United Arab Emirates (UAE).
The $5 billion facility, approved by the National Assembly earlier this year, is part of the federal government’s plan to diversify external financing sources and reduce borrowing costs. Structured as a Total Return Swap with First Abu Dhabi Bank, proceeds are earmarked for refinancing debt and supporting infrastructure financing.
If the proceeds are brought into the country through the official FX market, the transaction will increase the currency reserves or Dollar liquidity.
At the cryptocurrency market, Solana (SOL) grew by 2.2 per cent to $71.92, Cardano (ADA) gained 1.1 per cent to trade at $0.1474, Ripple (XRP) also appreciated by 1.1 per cent to $1.05, Dogecoin (DOGE) expanded by 0.9 per cent to $0.0755, and Ethereum (ETH) improved by 0.4 per cent to $1,578.84.
On the flip side, TRON (TRX) slid 0.6 per cent to $0.3203, Binance Coin (BNB) slumped by 0.3 per cent to $564.33, and Bitcoin fell by 0.2 per cent to $60,219.37, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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