Green White Green Recap
Macro Update
Nigeria’s Oil Output Nears OPEC Quota
The recovery in crude oil production to 1.48 million barrels per day in November and December 2024, the highest since December 2020, means Nigeria is now finally producing in line with its OPEC quota of 1.5 million barrels per day.
While the improvement in oil production is expected to support export growth, which should be mildly positive for the economy, production is still 16% short of its 1.77 million barrels per day production in January 2020. The picture worsens when we consider that the population has grown by 13% since then, which means that Nigeria’s oil output per capita has declined by 26%.
Key takeaway:
- Given the steady growth in Nigeria’s population, the benefits of a mild increase in production are negligible. Without a significant boost in oil production to peak levels and beyond, the sort of macroeconomic stability (a strong exchange rate and low inflation) supported by the oil sector in the past is unlikely to be repeated.
FX Update:
Naira/USD Closed the Week at N1,533/$1
The exchange rate appreciated from N1,546.72 on January 17, 2025, to N1533.26/$1 on January 24, 2025, on the official market. While on the parallel market, it traded at N1,660/$1.
Meanwhile, external reserves moderated by 0.89% from $40.3 billion recorded in the previous week to $39.9 billion.
Key takeaway:
- Long-term investors should look past the volatility in the currency and focus on consistently investing regardless of the exchange rate level.
Remember to save dollar-based goals in dollars, which can be done with apps like Ladda.
Equities Update:
The Nigerian Exchange (NGX) All-Share Index (ASI) ended the week with a gain of 1.22%, pushing its year-to-date returns to 0.65% in naira terms.
Sector Highlights (Week-on-Week):
Performance across sectors was a bit of a mixed bag.
The Industrial Goods sector made a gain of 0.12%.
The Oil and Gas sector made a loss of 0.93%, and the Banking sector made a gain of 4.09%.
Conversely, the Consumer Goods sector made a loss of 1.20%.
Key takeaways:
- Long-term investors may benefit from US exposure, particularly the S&P 500, which has delivered a 2.18% year-to-date dollar return.
- Until Nigeria’s macroeconomic conditions stabilise, diversifying into US markets may be advantageous.
Fixed Income Update:
Moderation in Yields in the Money Market
Here’s what’s happening with treasury bills and bonds:
Short-Term Treasury Bills:
- The 91-day treasury bill yield went down from 22.21% to 22.11%.
- The 182-day treasury bill yield went down from 24.93% to 24.82%.
Long-Term Treasury Bill:
- The 365-day treasury bill yield went down from 27.16% to 26.91%.
However, bond yields climbed to an average of 20.09% from 19.35%.
Key takeaways:
- While there is a downtrend in treasury bill yields, it is still a good option for short-term savings goals.
- You can invest in treasury bills to save for your short-term goal on rent, school fees, etc. through Ladda, a fintech app that helps you save at high returns.
For your long-term goals, we do not recommend naira treasury bills and bonds.
Star-Spangled Banner Recap
S&P 500 Rises by 1.77%, Outpacing FTSE 100 and MSCI World Index Gains
The S&P 500 soared by 1.77% this week, bringing its year-to-date return to approximately 3.97%.
The FTSE 100 lost about 0.03% while the MSCI World Index, which tracks global equities, increased by approximately 0.02%.
Key takeaway:
- As we await policy developments, we recommend maintaining exposure to the resilient US economy.
Remember to always save for your dollar goals in dollars. You can do this with us on Ladda—a fintech app that helps you save at high returns.
We hope you find this edition insightful, and as always, stay focused on your financial goals!
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