What To Expect From The Markets This Week - 060921


Saturday, September 04, 2021 07:00 AM / Proshare Content / Header Image Credit: EcoGraphics

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Nigeria: Economic Dashboard 030921

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Editor's Note

Source: Proshare Research - Septmeber 04, 2021

Nigeria Economy

  • The Nigerian Senate disclosed its resolve to drastically reduce the N5.6tn borrowing planned by the Federal Government in 2022. The regime of President Muhammadu Buhari had in the 2022-2024 Medium Term Expenditure and Fiscal Strategy Paper proposed to borrow the amount to fund the budget deficit.
  • Chairman of the Kebbi State chapter of the Rice Farmer Association of Nigeria (RIFAN), Muhammed Augie, disclosed that of the 70,000 farmers that benefited from the ABP loans in 2015, about 200 farmers were able to repay their loans forcing the association to resort to taking the farmers to court. Likewise, the ABP in the North-western region of the country has recorded a massive loan default. The ABP, an agricultural loan scheme launched in 2015 by the Central Bank of Nigeria (CBN) was designed to boost agricultural yields, halt large volumes of food importation and address negative trade balance.
  • This Monday, the foreign reserves of Nigeria finally hit $34 billion as the prices of oil in the global market continue to rise. Nigeria depends mainly on oil as its source of forex earnings and with the volume of oil production on the rise, Africa's largest economy is earning more, growing its reserves.
  • The 2021 Telecommunications Industry report released by Agusto & Co, revealed that Nigeria's telecommunications sector attracted $3.9 billion foreign investments (portfolio and direct) between 2015 and 2020. The report noted that the sector accounted for an average of seven % of Nigeria's total capital importation during the same period.  The report released by Agusto & expressed optimism that the imminent deployment of 5G technology and the Federal Government of Nigeria's broadband penetration target of 70 % by 2025, will support substantial additional foreign investments in the near to medium term.
  • According to the Minister of Finance Budget and National Planning, the government plans to raise 3.05bn Euros of the 6.1bn Euros external borrowing needed to fund the budget deficit from Eurobonds while the other portion could be provided by Multi-lateral organizations. The Minister revealed that the government will be going on a roadshow from October 11. Amidst criticisms over Nigeria's increasing debt profile, the minister said the government was borrowing 'sensibly and responsibly'.
  • Nigeria may have lost about $188.29 billion, representing more than 92 % of investment opportunities available to the country between 2017 and 2020. According to a report released by the Nigerian Investment Promotion Commission (NIPC) on "Investment announcements versus FDI (Foreign Direct Investments) Inflow in Nigeria, 2017 - 2020" the actual inflows of FDI into Nigeria within the period was about 7.65 % of the total investment announcements captured by the Commission.  According to analysts, this reflects a low level of investors' confidence. Also, the report shows that total investment announcements captured by NIPC during the period amounted to $203.89 billion whereas the actual FDI inflow was $15.6 billion, representing 7.65 %.
  • Based on the January to May 2021 budget implementation report released by the Ministry of Finance, actual government revenue in the first 5months of 2021 was N1.8 trillion (a 92.4% performance on a pro-rata basis. Revenue on the other hand settled at N2.23tn (a 67.3% performance on a pro-rata basis). The report also reveals that debt service amounted to N2.02tn in the period (representing 35% of FGN expenditures and 91% of revenue), while the Budget deficit reached a 44.6% deficit in the first 5months of the year.

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Global Economy

  • Data released by the US Commerce Department on Thursday reveals that the country's trade deficit was $70.1 billion in July, which is 4.3% lower than the previous month's downwardly revised figure and a bigger drop than analysts expected. Imports fell very slightly to $282.9 billion, while exports picked up 1.3% to $212.8 billion. Economists expect the deficit to narrow further as foreign consumption gains momentum and domestic demand decelerate. Analysts generally anticipate a gradual normalization in trade dynamics as vaccinations increase and supply disruptions slowly ease
  • Meanwhile, in the US, the number of Americans filing new unemployment claims has dropped to a pandemic low. There were 340,000 new 'initial claims' for jobless support last week, on a seasonally adjusted basis, a drop of 14,000. That is the lowest since the first wave of Covid-19 hit the US and shows that the job market continues to rebound. But it is still higher than before the pandemic, when jobless claims were in the low 200,000s. The number of 'continuing claims' (people on unemployment support for at least two weeks), fell to a pandemic low too, down 160,000 to 2.748m.
  • According to data released by the National Statistical Office (NSO) on Tuesday, India's economic growth surged to 20.1 % in the April-June quarter of this fiscal, supported by a low base of the year-ago period. The gross domestic product (GDP) had contracted last year by -24.4% in the corresponding April-June quarter of 2020-21, The government had imposed a nationwide lockdown at the onset of the COVID-19 pandemic last year. This year, the massive second wave of the pandemic hit the country in the middle of April, which forced states to impose fresh restrictions moderating recovery. As a result, the economy has not returned to the pre-COVID level.
  • According to the ECB, Consumer prices rose 3%, exceeding economists' forecasts. core inflation reached 1.6%, the highest since 2012. Considering higher inflation as temporary, officials are keeping monetary policy more accommodative than counterparts such as the Federal Reserve, which expects to wind down stimulus. Analysts do not expect the rise in inflation to sway the ECB towards a more hawkish stance ahead of the September meeting.
  • Worries about China's economy rose earlier in the week, after growth across its manufacturing companies slowed, while its service sector contracted for the first time since the height of the pandemic early last year. The latest official survey of purchasing managers showed that the Chinese economy cooled in August, as rising raw material costs and the ongoing Covid-19 pandemic hit companies. China's manufacturing Purchasing Manager's Index fell to just 50.1 in August from 50.4 in July, which is only slightly above the 50-point mark that separates growth from contraction. The service sector had a more torrid August - with China's services PMI tumbling to 47.5 this month from July's 53.3, into contraction territory.
  • Fed Chairman, Jerome Powell hinted that the US Federal Reserve will commence dialing down its extraordinary response to the pandemic recession. At the Jackson Hole Symposium which was held virtually last week, the Fed chairman said to the annual gathering of central bankers and academics that the economy had improved significantly this year, with average hiring in the past three months reaching the highest level on record for any similar period before the pandemic. Analysts expect that the Fed will likely announce a reduction -- or "tapering" -- of the asset purchase program sometime in the final three months of this year.

Summary and Outlook

The week opened on a bright note with news of accretion in the foreign reserves, helped by a rally in oil prices as well as the $3.45bn Special Drawing Rights from the IMF the country's reserves reached $34.7bn.  Ironically, the Naira has depreciated to N525/$ in the parallel market.  Analysts are of the view that while the current accretion in the reserves (as well as the FX swap deal recently sealed) could help with short-term appreciation in the Naira against the dollar there could still be a need to address the issue of Fx liquidity in the long term. Also in the week, the Nigerian senate announced its plans to cut down on the FG planned borrowing. As of March 31, the country's debt stocks stood at N33tr amounting to public debt to GDP of 21.13%, as the FG has concluded plans to add N5.6tn, the country's debt profile could see a rise close to N40tr. The concern for many analysts is how the loans would be deployed and repaid. If the budget implementation report released earlier in the week is a signal to work with, we can expect that much of it would be utilized for debt service- a vicious cycle. The report shows that as of H1 2021, Debt service to revenue stood at 91% while debt servicing accounted for 35% of government spending. 

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Commodities Market

Weekly Review and Outlook



  • Analysts and industry associations have decried the rising price of Liquefied Petroleum Gas (LPG), popularly called cooking gas, in the country. They attributed the rising price of cooking gas to the high cost of foreign exchange, the rising price of petroleum products in the international market, and government reimposition of 7.5% VAT on imported LPG. They noted that about 70% of cooking gas consumed in the country is imported while NLNG supplied about 30%.
  • The NLNG in a statement released on Monday said it does not contribute to the shortfall in the supply and the hike in the price of LPG. It rather attributed the challenges to the reimposition of VAT and forex impact. However, the statement noted that the supply of the company's product to the domestic market is bedeviled by lack of storage capacity, poor terminal access, draft restrictions, and prioritisation of other products over LPG.
  • In a figure released by the NNPC, the corporation said it incurred N756.99bn on petrol subsidy cost from January to July this year.
  • The Federal Ministry of Industry, Trade and Investment said it is pushing for an amendment of the newly passed Petroleum Industry Act (PIA) to address certain provisions which conflict with the mandate of the Weights and Measures Department of the ministry in the area of pre-shipment inspection activities at the crude oil terminals.
  • S&P Global Platts editorial on Monday stated that Nigeria's crude output was under pressure due to operational issues and supply is further at risk of insecurity. The report added that insecurity will add to production costs and stifle investment.
  • The NNPC on Thursday stated that concerted efforts by the corporation and some federal agencies to tackle the challenge of smuggling of petroleum products have been disrupted by existing huge price differences in the pump price of petrol in Nigeria and neighbouring countries.
  • The Minister of State for Petroleum Resources, Timipre Sylva, noted that he will launch the oil and gas Research and Development (R&D) Fund Utilisation Protocol, R&D 10-years Strategic Roadmap, and Technology Innovation and Incubation Centre in the coming week. An initiative of the Nigerian Content Development and Monitoring Fund (NCDMB).

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  • Oil prices reversed previous gains on Monday, pulling back from more than three-week highs reached earlier in the session, as a powerful hurricane slammed into the U.S. Gulf coast, forcing shutdowns and evacuations of hundreds of offshore oil platforms.
  • A survey by Reuters shows that OPEC+ pumped more crude oil in August, the highest volume since April 2020, after the OPEC+ alliance agreed to ease the production cuts by 400,000 bpd every month beginning in August. However, outages in Nigeria and Libya limited OPEC's supply to the market in August.
  • According to the US Department of Energy estimates, a total of 2.3 million bpd of refining capacity, or 13% of U.S. capacity, was shut in Louisiana due to Hurricane Ida while about 94% of oil and natural gas production remained suspended in the U.S. side of the Gulf of Mexico. Analysts believe power outages are likely to slow the reopening of the processing plants.
  • On Wednesday, OPEC+ agreed to continue a policy of phasing out record production reductions by adding 400,000 bpd each month to the market. The commission revised its 2022 oil demand growth forecast to 4.2 million bpd, up from a previous 3.28 million bpd.
  • Oil prices were mixed on Friday after a strong rise in the previous session on a weaker dollar and a fall in U.S. crude stocks and were set for modest weekly gains ahead of a highly anticipated U.S. monthly jobs report.
  • Both Brent and WTI benchmark oil contracts were largely steady for the week.


In the coming week, oil prices are expected to moderate further as OPEC maintains its gradual easing of oil amidst few cases of delta variant and prolong outages of power and activities in the US Gulf of Mexico and Louisiana.


Spot Prices of Commodities as of 18:12pm 03/09/2021





Weekly Chg






































 Source: CNBC, Proshare Research

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Fixed Income and Money Market 


Currency Market

The Naira continued its fall against major currencies this week, both at the BDC market and official market which is majorly attributed to the scarcity of FX.


At the I & E FX window, the domestic currency appreciated slightly by -0.12% on a week-on-week (W-o-W) basis to N411.50/US$ at the close of trading on Friday.


At the BDC market, it closed at US$/N528 depreciating by +1.54% against the US dollar, against the British pound it also fell by +0.98% to close at Pound/N720, and against the Euro it fell by +2.15% to close at Euro/N619.


The Naira closed the week at $/N411.50 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.36


Average Benchmark Yields



% Change

I & E FX Window








BDC ($/N)




Source: FMDQ, AbokiFX, Proshare Research


Money Market


For most of the trading session this week, money market rates were in single digit, this was supported by robust system liquidity, the liquidity in the system was driven by multiple inflows such as the N57 billion OMO repayment, SLF inflow of N18.65 billion.


At the close of the session on Friday, funding rates increased. Open Buyback (OBB) closed at 13.00% while Overnight (O/N) rates closed at 13.50% indicating a W-o-W rise of +56.06% for OBB and +58.82% for O/N rates.


Money Market Rate




% Change

OBB (%)




O/N (%)




Source: FMDQ, Proshare Research

Funding rates are expected to trade in double digits trend in the coming week in the absence of any inflow.


Treasury Bills Market

The bills market was mixed this week, with average benchmark yields for Treasury bills declining while OMO bills inched up at the close of trading this week.


At the close of the market this week, average benchmark yields for T-bills dipped by -6.87% to 4.61%, OMO bills were up by +1.32% W-o-W to close at 6.12%.


Average Benchmark Yields



% Change

T. Bills (%)




OMO Bills (%)








Source: FMDQ, Proshare Research


We expect activity next week to be dictated by the market liquidity situation. 

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FGN Bond Market

The FGN bond market this week was also mixed, with buying interest seen at the short and long-dated instruments, while holders of the mid-tenor notes went short.


The overall average benchmark yields closed at 8.31% for the week which fell slightly by  W-o-W by -0.84%.


Average Benchmark Yields



% Change

Short Tenor (%)




Mid Tenor (%)




Long Tenor (%)




Source: FMDQ, Proshare Research 


FGN Eurobond Market

The Eurobond market saw a less aggressive bullish bias on Friday, with buying concentrated at the mid to long end of the curve.  Average benchmark yields fell by 2bps to 5.68% at the close of trading.

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Nigerian Capital Market

  •  The Nigerian bourse closed the week on a negative note as performance was bearish. The NGXASI closed the week with a decline of -0.57%. The Nigerian Stock Exchange lost N117.04bn, year-to-date return moderated to -2.51%, while the market capitalisation settled at N20.46 trillion.
  • The volume and value of stocks traded on the exchange this week inched up by +30.49and +5.70respectively.
  • Sectoral performance across sectors tracked was broadly negative this week as the NGX Insurance was the highest gainer for the week with +0.79% while NGX Oil and Gas was the highest loser with -2.96%. NGX Consumer Goods, NGX-IND, NGX Banking, closed negative with -1.34%, -0.89% and -0.58% respectively.
  • Market breadth for the week closed negative with 26 gainers led by TRANSCORP and SKYAVN as against 36 losers led by OANDO and MBENEFIT

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Chart 1: Movement of NSEASI Index Points 27 Aug. 2021 - 03 Sep. 2021

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Source: NSE, Proshare Research


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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 739.89 points and N643.10 with a growth of +0.48% and +0.48% respectively.


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Dangote and Toni Index   

Dangote Index closed the week negative with 129.10 basis points from 131.42 basis points recorded the previous week, representing a decline of -1.76%.


DANGCEM and DANGSUGAR recorded a decline of -1.84% and -0.56% respectively while NASCON closed flat W-o-W.



Table 1: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed positive with 102.15 basis points from 98.53 basis points recorded the previous week, a W-o-W growth of +3.67%.


AFRIPRUD, TRANSCOHOT, TRANSCORP, UBA  and UBCAP all closed the week positive.


Table 2: Toni Index W-o-W Change

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In the coming week, we expect the weak trend to persist, pending further corporate actions from listed companies and other macroeconomic developments are likely to impact investors' decisions.


In addition, we expect investors to monitor the movement of yields in the fixed income market.

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