What To Expect From The Markets This Week - 150221

Proshare

Saturday, Febraury 13, 2021 08:00 AM / Proshare Content / Header Image Credit: EcoGraphics


  

Proshare Nigeria Pvt. Ltd.


Nigeria: Economic Dashboard @ 120221 

Proshare Nigeria Pvt. Ltd.



Editor's Note

Source: Proshare Research - February 13, 2021

Nigeria Economy

  • Dr. Yemi Kemi the Statistician-General of the Federation noted that it had completed the enumeration of establishment in December 2020. Over 1.4m establishments were enumerated as part of the process to rebase Nigeria's Gross Domestic Product.


He stated that the National Survey of Establishment is the second part of the National Business Sample Census 2020/21 which started in October last year after some delays brought about by the COVID-19 pandemic. The National Business Sample Census has two major components. The first component is listing or enumeration of business and commercial establishments across the country while the second part of the sample survey is currently ongoing. Furthermore, he noted that to be enumerated under the exercise, the establishment must have a fixed location as well as operate from a fixed structure that could be locked up, as well as other attributes.


  • FEC (Federal Executive Council) approved a new Medium Term Debt Management Strategy for Nigeria, from 2020 to 2023. According to the new debt management strategy, borrowing will be from domestic and external sources, but a larger proportion of new borrowing will be from domestic sources using long-term instruments while for external borrowing, concessional funding from multilateral and bilateral sources will be prioritized. The domestic debt was pegged at 70% maximum while external debt was 30% maximum, to further strengthen the domestic debt market and optimize access to both concessional and commercial sources of funding. The total debt as a percentage of Gross Domestic Product for 2020 to 2032 increased from 25% to 40% to accommodate new borrowings from the budget deficit and other obligations of the government.

  • The Central Bank of Nigeria in its November economic report noted that the fiscal deficit rose by N208.14bn to N620.49bn as of the end of November from N421.35bn at the end of October. According to the CBN, the Federal Government's fiscal deficit rose to N620.49bn as of the end of November from N421.35bn at the end of October. The rise in deficit was driven by the rise in personnel and overhead costs, and provisional aggregate expenditure. The provisional gross federally collected revenue stood at N706.47bn in November 2020, declining by -19.7% compared with November 2019 but increased by +7.2% relative to the previous month. The increase was attributed to upticks in both oil and non-oil revenue components.


Global Economy

  • The U.S. House committee approved a proposal to give airlines another $14bn in payroll assistance as part of a broader COVID-19 relief package. It would be the third round of support for the industry which has struggled since the advent of the coronavirus pandemic. American Airlines and United Airlines have warned of some 27,000 furloughs without an extension of the current package that expires on April 1. The House of Representatives Financial Services Committee on a 29-24 vote approved the $14bn for airlines and $1bn for contractors to cover payroll through September.  The funds will be included in the $1.9trn COVID-19 relief bill proposed by President Joe Biden, which excludes new money for airlines.
  • The US economy in 2020 posted its biggest annual trade deficit since 2008 as the global health crisis depressed export markets for American companies. According to data from the US Department of Commerce, the gap in the trade of goods and services widened to $678.7bn in 2020 from $576.9bn in 2019. The December deficit decline declined by -3.5% to $66.6bn from $65.7bn in November 2019.
  • The IMF in its economic outlook for Latin America noted that economic recovery of the region will remain uneven and at risk unless governments take control of the pandemic and COVID-19 cases decrease. IMF forecasts that Latin America's economy will grow by +4.1% in 2020, an upward revision from +3.6% it predicted last October. Furthermore, it re-iterated that unless there is a major reduction in coronavirus cases, that economic recovery will stall.
  • UNCTAD in its global trade report noted that the economic and social disruptions brought about by COVID-19 greatly affected global trade in 2020. It reported that world trade recorded a decline in value of about -9% in 2020, with trade in goods contracting by about -6% and trade in services declining by about -16.5%. Its projections for Q1 2021 indicate a slowdown in the recovery of trade in foods (a 1.5% decline relative to Q4 2020) and a further decline for trade in services (a 7% decline relative to Q4 2020), largely due to continuous disruptions in the travel sector. Furthermore, it revealed that projections remain imprecise due to persisting concerns about COVID-19 and uncertainty about the magnitude and timing of stimulus packages in some major economies.


Proshare Nigeria Pvt. Ltd.


Commodities Market

Weekly Review and Outlook

Energy

  • Earlier this week it was announced by Petroleum Products Pricing Regulatory Agency (PPPRA) that the landing cost of Premium Motor Spirit (petrol) imported into the country rose by 13.34 percent in one month to about N180 per litre on the back of the increase in global oil prices.
  • Nigeria lost an estimated N189.90bn from January to November 2020 as international oil companies and local players flared a total of 178.95 billion standard cubic feet of natural gas.
  • Vice-President Yemi Osinbajo on Thursday said Nigeria plans to have 30 percent of its electricity supply from renewables by 2030.
  • Global oil and fuel prices are picking up as demand returns to pre-pandemic levels amid easing coronavirus lockdowns in key countries like China and India and signs of increasing road travel in several countries.
  • Gasoline prices in Asia, Europe, and the United States all scaled 1-year highs this week, while benchmark global crude oil Brent futures topped $60 per barrel for the first time in a year.
  • In its outlook on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) noted that current oil demand levels were still "lagging" prior forecasts - an observation that knocked prices - but is expected to pick up in the second half of 2021.
  • The International Energy Agency (IEA), in a separate forecast on Thursday, said it expected demand to rise strongly later this year.
  • Oil prices eased on Thursday, ending a record streak of gains after both OPEC and the International Energy Agency (IEA) said renewed lockdowns and the emergence of new coronavirus variants reduced the prospect of a swift demand recovery.
  • Oil prices fell a second day on Friday, extending losses after OPEC cut its demand forecast and the International Energy Agency said the market was still oversupplied.
  • Brent had a weekly growth of +2.87% (see Table 1).


Metals

  • Gold jumped more than 1% on Monday, rose for a fourth straight day on Wednesday extending their recoveries from last week's dip as expectations of a large U.S. economic package bolstered bullion's appeal as an inflation hedge.
  • Gold appreciated by 0.26%, while Silver also inched up by 0.48% W-o-W (see Table 1).


Agriculture

Cocoa prices grew by 0.08% this week.

 Corn prices dipped by -1.23% W-o-W while Sugar declined by -3.39% (see Table 1).


Table 1Weekly Change in Commodity Prices

Commodity

12-Feb-21

05-Feb-21

31-Dec-20

Weekly Chg

YTD Chg

Brent

61.28

59.57

51.8

2.87%

18.30%

Gold

1813.62

1808.99

1898.67

0.26%

-4.48%

Silver

26.98

26.85

26.4011

0.48%

2.19%

Cocoa

2450

2448

2597

0.08%

-5.66%

Corn

542

548.75

484

-1.23%

11.98%

Sugar

15.69

16.24

15.28

-3.39%

2.68%

Source: Bloomberg, Proshare Research

*Data for 12th Feb 2021 is as of 3:43 pm (Nigerian Time)

 

Outlook

  • In the coming week, oil prices are expected to be mixed as demand fears are set to return after OPEC and the International Energy Agency said the market remains oversupplied.
  • Gold prices are expected to be choppy in the coming week, with higher bond yields and strengthening U.S. dollar expected to weigh on the yellow metal while expectations of a large U.S. stimulus package should drive prices up.
  • A poor demand driven by the COVID-19 pandemic is expected to keep cocoa prices on allow.
  •  Sugar prices expected to be rise next week as Container tightness slows down India's sugar export.
  • Corn prices to be firm in the coming week, s the U.S. Department of Agriculture's corn stock outlook came in higher than expected.



Proshare Nigeria Pvt. Ltd.



Fixed Income and Money Market 

  

Money Market

Money market rates were relatively higher at the start of the trading session of this week. However, rates declined during the week which was supported by OMO maturity.

 

 At the close of the trading session this week, Open Buyback (OBB) closed at 4.50% while Overnight (O/N) rates closed at 4.75% indicating a Week-on-Week (W-o-W) significant decline of -74.29% for OBB and -73.61% for O/N rates.

 

Money Market Rate

 

05-Feb-21

12-Feb-21

% Change

OBB

17.50

4.50

-74.29%

O/N

18.00

4.75

-73.61%

Source: FMDQ, Proshare Research

 

Rates are expected to continue to trend lower with the absence of any funding obligations.

 

Treasury Bills Market

The trading session for the Nigerian Treasury Bills market (NTB) for the week was mixed. Average benchmark yields for OMO bills increased after CBN increased stop rates during its last auction. At the start of the week, the average benchmark yield closed flat at 0.97%. Also, attention was on the NTB PMA auction that took place in the week.

 

At the close of the week, the average benchmark yields for the T-bills increased W-o-W by +43.69% to close at 1.48% while OMO bills also rose significantly by +242.56% to close at 6.68%. Yields for the CBN Special Bill rose significantly by +233.33% to close at 2.5% at the close of the week.

 

Average Benchmark Yields

05-Feb-21

12-Feb-21

% Change

T. Bills (%)

1.03

1.48

+43.69%

OMO Bills (%)

1.95

6.68

+242.56%

SPEB

0.75

2.5

+233.33%

Source: FMDQ, Proshare Research

 

The Apex bank sold N130.88 billion worth of notes against N169.78 billion offered in its NTB auction this week. The offer was over-subscribed across all tenors.  There was also a significant spike in stop rates.  The 91-day, 182-day & 364-day notes were allotted at 1.00%, 2.00%, & 4.00% respectively. Compared to the previous auction held on the 27th of January 2021, stop rates rose by +81.82%, +53.85%, and +100.00%, respectively.

 

Primary Market Auction Result - 10 Feb 2021

Tenor

Rate (%)

Amount Offer (N'bn)

Subscription (N'bn)

Allotted

(N'bn)

Previous Rate (%)

91 days

1.00

19.78

30.62

24.67

0.55

182 days

2.00

10.00

21.89

16.06

1.30

364 days

4.00

140.00

146.19

90.15

2.00

 

The Apex bank sold N169.00 billion worth of notes against N170.00 billion offered at its OMO auction. The 96-day, 187-day & 362-day notes were allotted at 7.00%, 8.50%, & 10.10% respectively. The stop rates were left unchanged from the previous OMO auction.

 

Participation in the NTB market is expected to be bullish as rates are starting to pick up.

 

FGN Bond Market

The overall trading session for the FGN Bond market for the week was bearish. Overall average benchmark yields closed at 5.07% for the week which increased W-o-W by +18.37% with sell interest seen more at the mid-end of the curve.


Average Benchmark Yields

 

05-Feb-21

12-Feb-21

% Change

Short Tenor (%)

2.17

2.69

+23.96%

Mid Tenor (%)

5.82

7.39

+26.98%

Long Tenor (%)

9.16

10.16

-3.78%

Source: FMDQ, Proshare Research


The FGN offers for subscription by auction for the February bond.

N50,000,000,000 - 16.2884% FGN MAR 2027 (10-Yr Re-opening)*

N50,000,000,000 - 12.50% FGN MAR 2035 (15-Yr Re-opening)*

N50,000,000,000 - 9.80% FGN JUL 2045 (25-Yr Re-opening)*

Auction Date: February 17, 2021

Settlement Date: February 19, 2021

 

Also, FMDQ announced the approval of the quotation of the Mixta Real Estate PLC N1.66 billion Series 33 Commercial Paper (CP) under its N20.00 billion CP Issuance Programme.

 

We expect the market to trend on a quiet note as investors await the February bond auction.

 

FGN Eurobond Market

The Nigerian Eurobonds started the week on a mixed note at the start of the week with some profit-taking seen across the board particularly after the previous week's bullish move. Average benchmark yields rose by 11bps to 5.41%.

 

Attention was shifted towards the Ecobank Eurobond issue which took place in the week and investors also responded negatively to the news about the FGN looking to significantly increase borrowing over the next two years as the Debt/GDP is set to increase from 25% to 40% and Domestic debt to External Debt set at 70:30 in the new debt management strategy.

 

We expect the market to continue to react to the news both on the domestic level and international level.

 

Foreign Exchange Market

It was a bearish market for the Naira this week against the US Dollar and at the different windows. However, against the Euros and British Pounds, the Naira appreciated. The Naira declined by -2.15% against the USD at the I & E FX window, for the BDC market it appreciated by +0.63%.

 

The Naira closed the week at $/N404.67 at the I&E FX window, at the NAFEX (spot market) it closed at $/N403.29, and at the BDC market, it closed at $/N475, £/N650, and Euros/N570. 



Proshare Nigeria Pvt. Ltd.



Nigerian Capital Market

  • The Nigerian bourse closed the week negative as Investor Sentiment on the market was broadly negative on the equities market with a decline of -3.04%. The Nigerian Stock Exchange shed N662.67bn in Market capitalization W-o-W while YTD return and market capitalization currently stand at +50.66% and N21.16trn.

  • The volume and value of stocks traded on the exchange this week dipped by -17.95% and -6.98% respectively.

  • Performance across sectors was broadly negative for the week, NSE Banking was the highest decliner for the week with a loss of -8.76%, NSE Insurance, NSE-IND, NSE-30, NSE Oil & Gas and NSE Consumer goods, dipped this week by -6.46%, -5.70%, -3.66, -1.03% and, -0.93% respectively.

  • Market breadth was negative for the week with 16 gainers led by MBENEFIT and MORISON  as against 55 losers led by NNFM  and NEM . 


 Proshare Nigeria Pvt. Ltd.


Chart 1: Movement of NSEASI Index Points 05 Feb.2021- 12 Feb.2021

Proshare Nigeria Pvt. Ltd.



Source: NSE, Proshare Research

 

Proshare Nigeria Pvt. Ltd.

NASD OTC

 

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 735.84 points and N527.98bn with the growth of +1.45% and +1.45% respectively.


 

 Proshare Nigeria Pvt. Ltd.



Dangote and Toni Index 

 

Dangote Index closed the week negative at 117.34 basis points from 122.33 basis points recorded the previous week, a decline of -4.08%. DANGCEM and DANGSUGAR recorded a decline in share price by -4.35% and -0.26% respectively while NASCON  closed flat WoW. DANGSUGAR recorded the highest decline W-o-W.

 

Table 2: Dangote Index W-o-W Change

Proshare Nigeria Pvt. Ltd. 

 

 

Furthermore, the Toni Index closed negative at 100.27 basis points from 102.94 basis points recorded the previous week, a W-o-W decline of -2.59%UBA, UBCAP, TRANSCORP and AFRIPRUD all closed the week negative with -2.96%, -1.57%, -3.00% and  -0.90% respectively. while TRANSCOHOT closed flat WoW.

 

Table 3: Toni Index W-o-W Change

Proshare Nigeria Pvt. Ltd.

 

 

 

Outlook

Given the bearish sentiment and breadth on the market this week including the outcome of the latest NTB auction showing a likelihood of yields improving we expect the current trend to continue in the coming week.

 

Also, we expect astute investors to take positions in dividend-paying stocks as companies release their full-year 2020 corporate earnings.



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



Contact Us:

To list your events, e-mail business@proshareng.comWhatsApp  0902-407-5284 and DM @proshare.



For further information, enquiry or clarifications, kindly email market@proshareng.com and research@proshareng.com Tel: 0700PROSHARE (070077674273). Call us NOW!

 

Follow @proshare @ecopoliticsNG @TheAnalystNG@PersonalFinanceNG and @WebTVng for coverage and updates.



Proshare Nigeria Pvt. Ltd.



Check out our Events Calendar for event details and follow us on WebTVAPP and Social Media for updates as the week unfolds. Yours to Serve!


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd. Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.  Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd. Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

Previous Week(s) Market Outlook

1.     What To Expect From The Markets This Week - 080221

2.     What To Expect From The Markets This Week - 010221

3.     What To Expect From The Markets This Week - 250121

4.     What To Expect From The Markets This Week - 180121

5.     What To Expect From The Markets This Week - 110121

6.     What To Expect From The Markets This Week - 281220


Proshare Nigeria Pvt. Ltd.


Latest Reports This Past Week

1.     FAAC Disburses N2.49trn to FG and N2.30trn to States in Year 2020 - NBS

2.     Proshare 2021 Report - Understanding the Mega Trends of a Crucial Year for an Economy

3.     Full Report: NCM Leveraging A Crisis The Nigerian Capital Market

4.     Full Report: Oil And Gas: Working The New Normal In The Time Of A Pandemic

5.     #PFSeries3 - Investing in Peace of Mind: Focus on Insurance

6.     Covid Related Reports

7.     62.18% of Nigeria's Total Public Debt as of Q3 2020 Was Domestic - NBS

8.     Active Voice Subscribers Grew by 4.59% in Q3 2020 - NBS

9.     Headline Inflation Increases by 15.75% YoY In December 2020, 0.86% Higher Than November 2020 Rate

10.  Average Price of 1kg of Rice Increases by 23.46% YoY in November 2020 - NBS

11.  NBS Publishes COVID-19 Impact Monitoring Survey Report for October 2020

12.  Average Air Fare Increases by 18.47% YoY in November 2020 - NBS

13.  Capital Importation into Nigeria Stood At $1,461.49m in Q3 2020 - NBS

14.  Banking Sector Records 2.78bn Volume of Transaction in Q3 2020 - NBS


Proshare Nigeria Pvt. Ltd.



Related News

1.     Investors Lose N662.66bn WoW as NSEASI Dips by -3.40% to Close the Week Negative

2.     Investors Gain N166.51bn as NSEASI Inches Up by 0.78% Amid Negative Market Breadth

3.     Investors Lose N425.92bn as NSEASI Dips by -1.96% Amid Increased Sell Pressure

4.     Investors Lose N28.33bn as NSEASI Dips by -0.13% Amid Improved Market Breadth

5.     Investors Lose N74.40bn as NSEASI Dips by -0.35% to Open the Week Negative



Proshare Nigeria Pvt. Ltd.



Read More - The Monthly Proshare CONFIDENTIAL  

1.      The Nigerian Capital Market Report 2020: Leveraging a Crisis

2.     Oil and Gas: Working the New Normal in the Time of a Pandemic

3.     Banks in H1 2020: Imagining Beyond COVID-19

4.     Outlook 2021: Understanding the Mega Trends of a Crucial Year for an Economy

5.     Roads: Concrete Vision, Asphalt Competition, Looking Ahead

6.     CEO Remuneration 2020 Report: Between 2019 and 2020; Understanding The New Realities

7.     Coronanomics (1) - Understanding the Realities of an Impending Recession

8.     NCM2020 - Fin. MKT in Transition: Understanding Past Uncertainties; Preparing for New Possibilities

9.     Banks' H1 2019 Numbers: Top Line Growth, Bottom Line Uncertainty

10.  CEO Remuneration: Making Sense Of The Numbers For Listed Companies In Nigeria

11.   Budget 2019: The Hidden Monsters

12.  Surviving Uncertain Times in the Nigerian Financial Market

13.  The Rich, The Poor and Buharinomics

14.  Nigerian Banks- Performance - H1 2018

15.  AMCON and Financial Services Debt Burden in Nigeria

16.  Poverty Tracker and Nigeria: Raising The Red Flag

17.  POCKET Economics: Addressing Income Inequality

18.  The Silent Drug Epidemic: A Gathering Storm

19.  Judging IMF’s Position on Development Indices

20. Money Market: The Folk Road

21.  The Headache of Missing Targets

22. 2018 Outlook on the Nigerian Economy: The Need for an Even Keel

23. Nigeria External Economy and the White Noise of Import Dependency

24. States and the Rising Weight of Debt



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP