Overview

In the month of September, Naira bond rates and T-bill yields both rose, continuing the upward momentum established during August. The average yield of T-bills across various maturities rose to 7.94% while the yields of 1-year T-bills rose to 11.4% per annum. The bond market was characterized by a weak Federal Government of Nigeria (FGN) bonds auction and consequently yields rose.

The NGX All-Share Index traded broadly flat over the month, recording a fall of just 0.3%. It was noticeable that there was very high turnover in banks and, as we present in detail below, there were big winners and losers among different bank stocks. This behaviour is consistent with some investors taking profits in banks while others, quite likely institutional investors such as pension funds, take up the slack by buying what is on offer, in our view.

Inflation was reported for September at 26.72% year-on-year (August: 25.80% y/y), with food inflation at 30.64% (August: 29.34% y/y) and core inflation at 21.84% y/y (August: 21.15% y/y). There seems to be continued upward pressure on inflation and little holding it back.

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