What To Expect From The Markets This Week - 040121


Saturday, January 02, 2020 07:35 AM / Proshare Content / Header Image Credit: EcoGraphics


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Nigeria: Economic Dashboard @ 010121 

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Editor's Note

Source: Proshare Research - December 26, 2020

Nigeria Economy

  • The Lagos Chamber of Commerce in its Economic, Business Review for 2020 and Outlook for 2021 noted that MSMEs with an active presence in Lagos lost at least N2.7bn in revenue to the lockdown. It was further stated in the report that the sharp Naira exchange rate depreciation coupled with sustained acceleration in domestic prices escalated both costs of production and operation for investors in the economy. LCCI forecasted that the outlook for the business environment particularly for MSMEs in 2021 was dim.
  • President Muhammadu Buhari signed the 2021 Appropriation bill of N13.58trn and the Finance Bill into law on December 31st, 2020. The approved budget figure consists of total capital supplementation of N1.06trn, capital expenditure of N4.1trn, statutory transfers of N496bn, recurrent expenditure of N5.6trn, and N3.3trn for debt servicing.
  • CBN in its report titled "Credit condition survey report" revealed that the default on loans with collateral worsened in the fourth quarter of 2020. Findings from the report show that secured loan performance, measured by default rates, worsened in Q4 2020, while lenders expect default rates in Q1 2021 to remain unchanged. Also, it was noted that the performance of total unsecured loans to households, measured by default rates, improved in Q4 2020, and was expected to improve further in Q1 2021.  Furthermore, the availability of secured credit to households increased in Q4 2020 and was expected to increase in Q1 2021.
  • According to data from CBN's Q3'20 Economic Report, Nigeria's remittances into the country declined by -26.7% Y-o-Y to $12.9bn as of September 2020 from $17.6bn in Q2 2019. Furthermore, the report noted that the inflow of personal transfers in the form of workers' remittances rose significantly by +14.87% to $3.87bn, relative to $3.37bn in Q2 2020.


  • The Nigerian economy officially entered a recession in Q3 2020 as it recorded a 2nd consecutive contraction in its GDP. Its GDP contracted by -3.62% in Q3 2020. It is forecasted that Nigeria's GDP will record its 3rd consecutive contraction in Q4 2020, but the level of contraction would be milder relative to previous quarters. Furthermore, Nigeria's GDP growth would be predicated on its policies to contain the COVID-19 spread, recovery of the global economy, and the recovery in oil price.
  • In 2020, Nigeria's inflation rate rose consistently. The consistent rise was attributed to factors such as the advent of the COVID-19 pandemic, insecurity, land border closure, structural rigidities such as poor infrastructural facilities, logistics, epileptic power supply, etc. The opening of the Nigerian border would enable legitimate goods to come through the border providing temporary relief to rising food prices.


Global Economy

  • Rwanda and the UK will restart negotiations of a potential deal early next year, which would determine the future trade relations between the two countries. Rwanda currently trades with the UK under the protocols of the EU, but Britain's complete transition from the EU would officially kick off on January 1st, 2021.
  • The US government has threatened to raise tariffs on certain European Union products, including aircraft components and wines as well as cognacs and other brandies from France and Germany, the latest twist in 1 16-year battle over aircraft subsidies between Washington and Brussels.
  • China and the European Commission announced that they finished talks on a "Comprehensive Agreement on Investment" which will give each region's businesses greater access to other's market. The EU noted that China agreed to prohibit distortive practices including forced technology transfers which will improve the level playing field for EU investors.
  • The post-Brexit trade deal with Brussels has been passed into law by the UK's parliament. The deal is supposed to take effect on January 1st, 2020 after four and a half years after the Brexit referendum vote to tale the UK out of the EU, but its rapid approval raised concerns from MPs and peers that the bill was not properly scrutinized.
  • China's PMI stood at 51.9, according to data from the Chinese National Bureau of Statistics. It was a slight decline compared to November's reading of 52.1. It should be noted that 50-level separates an expansion from a contraction.


  • IMF projected that global growth would contract by -4.4% in 2020, however, it projects that there will be a rebound of +5.2% in 2021. It noted that except for China where output is expected to exceed 2019 levels this year, output in both advanced economies and emerging & developing economies is projected to stay below 2019 levels well into 2021.

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Commodities Market

Weekly Review and Outlook


  • Oil rose to hit $52 a barrel on Monday as U.S. President Donald Trump's signing of a coronavirus aid package and the start of a European vaccination campaign outweighed concern about a weak near term demand.
  • Oil gained more ground on Wednesday as a U.S. fiscal aid package and a decline in crude oil inventories lifted prices.
  • Prices rallied after an Energy Information Administration report showed crude inventories fell by 6.1m barrels in the latest week to 493.5m barrels.
  • However, the emergence of a new variant of the virus, first seen in Britain and now detected in other countries such as South Africa, United States and India, has led to movement restrictions being reimposed, hitting near-term demand and weighing on prices
  • Brent had a weekly growth of +0.93% (see Table 1). 



  • Gold prices appreciated by +1.3%, a reversal from loss recorded in the previous week. Silver also gained by +3.83% W-o-W (see Table 1).


  • Cocoa prices appreciated by +2.6% this week, extending gains from last week. Corn prices grew by +7.4% W-o-W while Sugar also appreciated by +3.4%  (see Table 1).

Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: Bloomberg, Proshare Research

*Data for 31st Dec, 2020 is as of 4:35 pm (Nigerian Time)



  • In the coming week, oil prices are expected to be bearish given the fast-spread of the new variant of the virus which has led to tighter restrictions in Britain and Europe and sparked worries about a slower recovery in fuel demand. Another factor that is likely to pressure prices is the swelling year-over-year supply.
  • Gold prices are expected to rise as real yields continue trading in the negative territory and the imminent approval of the relief package.
  • New coronavirus strain to disrupt cocoa supply to Europe, keeping prices high
  • Higher cane output and dwindling demand to keep sugar prices low.
  • Corn prices to rise during the coming week, as China continues to ramp up its demand for U.S. grains

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Fixed Income and Money Market 


Money Market

Being the last week in the year, the money market rates started the week flat as system liquidity remained fairly robust. However, rates inched higher at the end of the week, at the close of the trading session of the last day of the year, open buyback (OBB) closed at 0.50% while overnight rates closed at 0.83%.


Rates are expected to trend lower in the absence of funding obligations.


Treasury Bills Market

The Nigerian Treasury Bills market (NTB) maintained its quiet trend at the beginning of the weak with more activity on the long end of the curve while the short and mid-end of the curve were flat.


At the beginning of the week the CBN was expected to roll out bills worth N74.8bn at the Primary Market Auction (PMA) across the 91 (N10.0bn), 182 (N20.0bn), and 364-day (N44.8bn) tenors during the week, however, the PMA result shows    N54.84bn was issued across 91-day (N10bn) and 364-day (N44.84bn) and stop rates were 0.035% and 1.21% for the 91 and 364-day tenor respectively. Both tenors were oversubscribed by 205.55% for the 91-day and 149.72% for the 364-day tenor.


Average yields across all maturities of T.bills closed the week at 0.46% while the average benchmark yield across the OMO bills closed the week at 0.58%.


Participation in the NTB market is expected to continue its quiet trend as a result of the depressed yields.


FGN Bond Market

The week was a week of sell-off and profit-taking for the FGN Bond market although, less aggressive. At the beginning of the trading session this week, sell interest was witnessed across all tenors especially on the short to mid-end of the curve. Average benchmark yields for the week closed at 3.13% with more participation at the mid to long-end of the curve.


We expect the market to continue in a quiet trend in the coming week.


FGN Eurobond Market

The trading session in the Eurobond market for the week was mostly bullish as average benchmark yields rose by 14 base points (bp) at the start of the week. This was on the back of hopes of a further boost to the U.S stimulus package and a rise in crude oil prices.


We expect the market to continue the bullish trend although on a less aggressive note as it will be the beginning of a new year.


Foreign Exchange Market

At the I&E FX window, the Naira depreciated against the USD by -4.66% while at the BDC market it appreciated by +0.84% week-on-week (W-o-W).


The Naira closed the week at $/N410.25 at the I&E FX window, at the NAFEX (spot market) it closed at $/N391.88, and at the BDC market, it closed at $/N470, £/N626, and Euros/N575. 

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Nigerian Capital Market

The Nigerian Bourse sustained a bullish momentum this week, the market Closed the Year 2020 with a +50.03%  Gain YTD to hit the Psychological Line of 40,000 points. NSEASI advanced further by +3.79%  WoW while the Market cap also advanced by N777.56bn WoW to close at N21.05trn.


 A total turnover of 1.81bn shares worth N25.966bn in 14,634 deals was traded this week by investors on the floor of the Exchange. The volume and value of stocks traded on the exchange this week advanced b+82.36% and +26.57% respectively. The most traded stocks by volume were AIICO, ACCESSBANK, and UBA accounting for 763.17m shares worth N3.03bn in  1,764 deals, contributing 42.25% and 11.67% to the total equity turnover volume and value respectively.

Performance across sectors was broadly positive for the week, NSE-IND was the highest advancer for the week with an increase of +10.37%, NSE-30, NSE Oil & Gas and, NSE Insurance advanced this week by +4.58%, +0.19% and, +1.74% respectively. NSE Banking recorded the highest decline with -0.56% WoW.


Market breadth was flat for the week with 32 gainers led by NEM and JAPAULOIL as against 32 losers led by FTNCOCOA and AIICO.

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Chart 1: Movement of NSEASI Index Points 24Dec. 2020 - 31Dec. 2020

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The NASD OTC Security Index (NSI) and Market Capitalization closed the trading week with a positive movement in Market capitalization and NSI. The NSI and Market capitalization closed the week at 733.00 points and N525.94bn with +0.49% and +0.49% respectively. 


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Dangote and Toni Index 


 Dangote Index closed the week negative at 129.03 basis points from 129.18 basis points recorded the previous week, a decline of -0.12% DANGCEM and DANGSUGAR recorded a decline in share prices, with -0.04% and -1.68% respectively while NASCON  closed flat WoW. DANGSUGAR recorded the decline gain WoW.


Table 2: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed positive to close at 129.03 basis points from 101.14 basis points recorded the previous week, a W-o-W growth of +1.36%UBA closed the week positive with +2.37% while TRANSCORP and UBCAP closed negative with -3.23% and -0.84% respectively. TRANSCOHOT and AFRIPRUD closed flat WoW.



Table 3: Toni Index W-o-W Change

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