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<\/div>\n<\/div>\nMARKET INDICATOR<\/strong><\/span><\/p>\n By Obinna Chima<\/p>\n The employment level index in Nigeria\u2019s Purchasing Managers\u2019 Index <\/p>\n <\/p>\n According to the latest PMI, of the 16 sub-sectors, seven recorded Also, at 54.9 points, inventories index grew for the fifth consecutive Forex Market Interbank Money Market Bond Market Fitch Affirms Nigeria\u2019s Rating Power Sector Loan<\/a> Wigwe, who said this during an interview on ARISE News Channel, the <\/p>\n<\/div>\n Thisday <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"
\n(PMI) stood at 51.5 points in August, indicating growth in employment
\nfor the fourth consecutive month.<\/p>\n
\ngrowth, four remained unchanged while five sub-sectors recorded
\ndecline in employment level over the preceding month.
\nAlso, the business activity index moderated to 56.1 points in August
\n2017, indicating growth for the fifth consecutive month. The index
\ngrew at a slower rate, when compared to its level in the previous
\nmonth.
\nThe report showed that 12 sub-sectors recorded growth in business
\nactivity; three remained unchanged while three declined in the review
\nmonth.<\/p>\n
\nmonth, and at a faster rate when compared to its level in July 2017.
\nThirteen of the 16 subsectors recorded growth, one remained unchanged
\nwhile two sub-0sectors recorded decline in inventories.
\nOn the other hand, the non-manufacturing PMI report showed business
\nactivities and new orders grew at a slower rate; but employment level
\nand inventories grew at a faster rate in August 2017.
\n\u201cThe composite PMI for the non-manufacturing sector stood at 54.1
\npoints in August 2017, indicating growth in non-manufacturing PMI for
\nthe fourth consecutive month.
\n\u201cOf the 18 non-manufacturing sub-sectors, 15 recorded growth in the
\nfollowing order: utilities; public administration; information &
\ncommunication; finance & insurance<\/a>; health care & social assistance;
\nagriculture; accommodation & food services; electricity, gas, steam &
\nair conditioning<\/a> supply; transportation & warehousing; repair,
\nmaintenance\/washing of motor vehicles; wholesale trade; educational
\nservices; professional, scientific, & technical services; arts,
\nentertainment & recreation; and water supply, sewage & waste
\nmanagement.
\n\u201cThe real estate<\/a>, rental & leasing; construction; and management of
\ncompanies sub sectors recorded contraction in the review period,\u201d it
\nadded.
\nAlso, the new orders index at 53.5 points grew in August 2017 for
\nthe fifth consecutive month. Precisely, of the 18 sub-sectors, 12
\nreported growth; one remained unchanged while five recorded decline.
\nThe employment level Index for the non-manufacturing sector stood at
\n54.4 points, indicating growth in employment for the fourth
\nconsecutive month. Fifteen sub-sectors recorded growth in the review
\nmonth, one remained unchanged while two recorded declines.
\n\u201cAt 52.3 points, non-manufacturing inventory index grew for the fourth
\nconsecutive month, indicating growth in inventories in the review
\nperiod.
\n\u201cEleven subsectors recorded higher inventories, 2 remained unchanged
\nwhile 5 subsectors recorded lower inventory in August, 2017,\u201d the
\nreport added.<\/p>\n
\nMeanwhile, the Central Bank of Nigeria (CBN) last week
\ninjected a total of $547 million into the forex market.
\nHowever, despite the intervention, the interbank exchange rate (NIFEX)
\nremained unchanged at N330 to a dollar.
\nIn other segments, Cowry Assets Management Limited, in a report
\nrevealed that the naira appreciated week-on-week at the Bureau De
\nChange and Parallel market segments by 1.36 per cent and 1.35 per cent
\nto N362 to the dollar and N365 to the dollar respectively.
\nIt however depreciated at the Investors & Exporters\u2019 forex window
\n(I&E) by 0.03 per cent to N359.67 to the dollar.
\nIn the forwards market, the spot contract depreciated week-on-week by
\n0.02 per cent to N305.85 to a dollar.
\nHowever, the 3-month, 6-month and 12-month forward contracts
\nappreciated week-on-week by 0.27 per cent, 0.34 per cent and 0.10 per
\ncent to N377.4 to the dollar, N397.17 and N435.18 to the dollar
\nrespectively.
\nCowry Assets Management\u2019s analysts anticipated that the week, the CBN
\nwould continue to intervene in the interbank segment and increasing
\ninvestor confidence would lead<\/a> to further stability of the
\nnaira\/dollar exchange rate.
\nThe market did not open on Friday and Monday because of the public
\nholiday declared to celebrate the Eid-el-Kabir.<\/p>\n
\nLast week, the CBN auctioned treasury bills via primary and secondary
\nmarkets totalling N211.77 billion, viz: 91-day bills worth N26.14
\nbillion (Stop Rate (SR) fell to 13.30% from 13.42%); 182-day bills
\nworth N30 billion (SR fell to 17.36% from 17.40%); 364-day bills worth
\nN137.00 billion (SR fell to 18.52% from 18.53%); 175-day bills worth
\nN18.58bn and 177-day bills worth N0.05 billion.
\nA part of these was offset by matured treasury bills worth N88.14 billion.
\nHowever, the Nigerian Interbank Offered Rates (NIBOR) fell across all
\nmaturities. Specifically, NIBOR for overnight funds, 1-month, 3-month
\nand 6-month fell week-on-week to 9.03 per cent (from 11.32), 19.09 per
\ncent (from 19.88%), 21.39 per cent (from 22.71%) and 22.77 per cent
\n(from 23.61%) respectively.
\nThis was as the impact of the Federation Accounts Allocation
\nCommittee\u2019s (FAAC) disbursement of N467.8 billion to the three tiers
\nof government last week was felt by the financial system.
\nSimilarly, the Nigerian Inter-bank Treasury bills True Yields (NITTY)
\nfell for all the maturities\u2013 yields on the 1-month, 3-month, 6-month
\nand 12 months maturities fell to 17.01% from (18.28%), 19.66% (from
\n20.30%), 19.48% (from 20.38%) and 22.20% (from 22.39%) respectively.
\n\u201cThis week, we expect maturities via secondary market worth N135.41
\nbillion viz: 345-day bills; hence, we look forward to further
\nfinancial system liquidity ease and resultant decline in interbank
\nrates,\u201d Cowry Assets analysts stated further.<\/p>\n
\nAlso, prices of FGN bonds traded at the over-the-counter (OTC) segment
\nfell for most maturities amid sustained profit taking.
\nThe 20-year, 10% FGN JUL 2030 paper, the 10-year, 16.39% FGN JAN 2022
\ndebt and the 5-year, 14.50% FGN JUL 2021 debt depreciated week-on-week
\nby N0.06, N0.31 and N0.69 respectively; corresponding yields rose to
\n16.62% (from 16.61%), 16.47% (from 16.37%) and 16.77% (from 16.51%).
\nHowever the price of the 7-year, 16.00% FGN JUN 2019 appreciated by
\nN0.34 with the corresponding yield falling to 16.67% (from 16.89%).
\nElsewhere, FGN Eurobonds traded on the London Stock Exchange
\nappreciated in value for all of the maturities amid sustained bargain
\nhunting.
\nBut the 10-year, 6.38% JUL 12, 2023 and 5-year, 5.13% JUL 12, 2018
\nbonds appreciated by $0.74 (yield fell to 5.24% from 5.39%) and $0.14
\n(yield fell to 3.29% from 3.49%) respectively.
\nIn addition, a 10-year FGN bond worth N20 billion matured in the just
\nconcluded week; hence, a boost in liquidity was anticipated, with
\nattendant increase in bond prices at the OTC market this week.<\/p>\n
\nFitch Ratings last week affirmed Nigeria\u2019s long-term foreign currency
\nIssuer Default Rating (IDR) at \u2018B+\u2019 with a \u201cnegative outlook\u201d.
\nThe international rating agency in a statement explained that
\nNigeria\u2019s rating was supported by its large and diversified economy,
\nsignificant oil reserves, its net external creditor position, low
\nexternal debt service ratio and large domestic debt market.
\nThese, it stated, were balanced against relatively low per capita
\ngross domestic product (GDP), an exceptionally narrow fiscal revenue
\nbase and a weak business environment.
\nAccording to Fitch, the negative outlook reflected the downside risks
\nfrom rising government indebtedness, the possibility of a reversal of
\nrecent improvements in foreign currency (FX) liquidity, and a
\nfaltering of the still fragile economic recovery.
\nFitch had forecast that the Nigerian economy would grow by 1.5 per
\ncent in 2017 and 2.6 per cent in 2018, following the country\u2019s first
\ncontraction in 25 years in 2016.
\nGDP growth continued to contract in 1Q17, but by less than in the
\nprevious four quarters.
\n\u201cThe recovery will be driven mainly by increased FX availability to
\nthe non-oil economy and fiscal stimulus, as higher oil revenue and
\nvarious funding<\/a> initiatives have raised the government\u2019s ability to
\nexecute on capital spending plans.
\n\u201cHowever, the FX market remains far from fully transparent, domestic
\nliquidity has also become a constraint, and the growth forecast is
\nsubject to downside risks,\u201d it noted.<\/p>\n
\nThe Group Managing Director and Chief Executive Officer of Access
\nBank Plc, Mr. Herbert Wigwe, last week explained why Nigerian banks
\nstill have not made provisions for most of the power sector loans<\/a>,
\ndespite the fact that most of the loans taken by investors who bought
\nup the federal government\u2019s assets in the electricity sector almost
\nfour years had defaulted on their loan repayments. He said if the
\nbanks were to make impairment charges on the loans it would be
\ncounterproductive, as the power sector was systemically important and
\ncritical to the growth of the Nigerian economy.<\/p>\n
\nsister broadcast station of THISDAY Newspapers, described the issues
\nsurrounding the power sector privatisation as very important and urged
\nthe federal government to look into the issues and create some form of
\nreprieve for investors that had staked their funds in the sector.
\n\u201cThere is a problem in that value chain and there is also a problem
\nwith the pricing<\/a> of their product which everybody needs to look at.
\nThere is a problem in terms of access to gas also,\u201d he explained.<\/p>\n
\n<\/p>\n