What To Expect From The Markets This Week - 270921


Saturday, September 25, 2021 08:30 AM / Proshare Content / Header Image Credit: EcoGraphics

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Nigeria: Economic Dashboard 240921  

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Editor's Note

Source: Proshare Research - September 25, 2021

Nigeria Economy

  • The Senate on Wednesday passed the 2022-2024 Medium Term Expenditure and Fiscal Strategy Paper, earlier submitted by President Muhammadu Buhari in July 2021. Meanwhile, the Senate held the projected exchange rate at N410.15/$, Gross Domestic Product growth rate of 4.20%, the projected inflation rate was retained at 13 % while the fiscal deficit was estimated at N5.62tn. Projected new borrowing of N4.89tn (including foreign and domestic borrowing) was also retained and approved.
  • According to 'The Impact of COVID-19 on Business Enterprises in Nigeria report' jointly released by the United Nations Development Programme and the National Bureau of Statistics, there have been promising signs of recovery this year. However, according to the report, there was a significant decline in revenue faced by enterprises and establishments across the country due to the pandemic, suggesting that 81 % of enterprises that were interviewed experienced a decline in revenue, while 73 % stated that they faced liquidity challenges due to secondary impacts of the pandemic in 2020.
  • Historical data available on the website of the budget office of the federation shows that the Federal Government spent N20bn on the Ajaokuta Steel in six years even though the steel mill remained idle in the period. According to the website, in 2017, the total allocation was N4.3bn with recurrent expenditures at N3.9bn and capital expenditures at N354.1m. In 2018, the total allocation was N4.3bn with recurrent expenditures at N3.9bn and capital expenditures at N354.1m. In 2019, the total allocation was N3.6bn with recurrent expenditures at N3.3bn and capital expenditures at N262m. In 2020, the total allocation was N3.7bn with recurrent expenditures at N3.6bn and capital expenditures at N147.2m.
  • Power generation data from Nigeria's System Operation (SO) showed that despite massive interventions the country's electricity generation stood at 3221 megawatts as of September 14, 2021, a far cry from its 13,000 megawatts capacity.  Analysts noted that this is not commensurate with growth data from the National Bureau of Statistics (NBS) which revealed that the electricity, gas, steam and air conditioning supply sector recorded a massive year-on-year growth of 114.30 % in the second quarter of 2021.
  • During a tour of Dangote's Savanna Sugar Company Limited in Adamawa, Minister of Industry, Trade and Investment, Otunba Niyi Adebayo, expressed satisfaction with the plantations and the level of work. Meanwhile, Chairman of the Dangote Sugar Refinery Plc, Aliko Dangote, stated that the National Sugar Masterplan  if executed as designed and if all players follow the rules, can help the country to save up to $700m annually
  • During the LCCI's 'SME Group Workshop on Assisting MSMEs with Regulatory Compliance' that held on Thursday, Assistant Director of Taxes at the Lagos State Inland Revenue Service (LIRS), Adetola Olanrewaju declared that Lagos State is prepared for VAT collection, even though as the matter is still in the court details can not be provided to the public. The Appeal Court had ordered all parties in the VAT tussle to maintain status quo and refrain from taking any action that would give effect to the judgment delivered by the Federal High Court, Port Harcourt. 

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Global Economy

  • Federal Reserve Chair Jerome Powell announced that the FOMC, at its meeting that concluded on Sept. 22, 2021, has decided to keep interest rates at zero and continue the current pace of asset purchases. More specifically, the FOMC will continue to target the benchmark federal funds rate at a range of 0% to 0.25%.1. Meanwhile, Powell disclosed that it is now time to scale back the asset purchase program.  As a result, Fed officials and analysts are of the view that while short-term rates can be raised at least thrice in 2023 a reduction in the quantitative easing program may be made as soon as  November 2021 while the actual reduction could kick in by December 2021. Jay Powell reiterated the Fed's commitment to its dual mandate of promoting maximum employment while also fostering price stability. However, the Fed Chairman warned that the path of the economy continues to rely on the path of the [COVID-19] virus.
  • Chinese authorities are signaling a reluctance to bail out the Evergrande Group the giant property developer which has become debt-saddled. Local governments have been asked to prepare for the potential downfall of China Evergrande Group while bracing for any economic and social fallout from the company's travails. Analysts are however of the view that given the importance of the property sector to the country's economy, Beijing will need to intervene to prevent a fast and sharp housing deterioration. Meanwhile, on Friday, Evergrande's electric car unit warned that it faced an uncertain future unless it got a swift injection of cash, the clearest sign yet that the property developer's liquidity crisis is affecting other parts of its business.
  • According to the latest Global Trade Outlook released by the UK Department of international trade. India will turn the third-largest importer by 2050 with a share of 5.9% of global imports, right behind China and the United States, and with a share of 6.8% in the global gross domestic product (GDP). The center of economic gravity has been shifting eastward for decades due to the rapid growth in Indo-Pacific, causing trade patterns to shift as it moves. At present, India is ranked eighth among the largest importing nations with a 2.8% import share and is set to become the fourth-largest importer by 2030. 

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Summary and Outlook

Ahead of the presentation of the 2022 Appropriation bill by the President, the MTEF/FSP 2022-2024 was passed by the Senate earlier in the week and although the plan provides a robust framework to guide budgeting in the stipulated period, certain underlying assumptions of the framework are somewhat problematic. For instance,  projected revenue was  N8.36tr while projected expenditure was set at  N13.98tr implying that the budget deficit is expected to reach N5.62tr(similar to the 2021 budget deficit), this gives analysts a cause for concern as it indicates that at this rate, there is a huge likelihood that the country may find itself in a debt overhang going forward.

Likewise, the assumption that GDP would grow at a rate of 4.2% appears ambitious given that the recent rise in GDP (H12021) was supported by a base effect. Also, the projection of an exchange rate of N410/$ presupposes that domestic oil production would rise to complement the rather prudent $57/barrel projection of oil price adequately enough to buffer the country's fx reserves. Finally, the forecast inflation rate of 13% is also not consistent with current realities.  

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Commodities Market

Weekly Review and Outlook



  • President Muhammadu Buhari on Tuesday sent a request to the Nigerian Senate seeking an amendment of the Petroleum Industry Act 2021. The President is seeking to increase the numbers of non-executive board members of each of the two new regulatory agencies of the oil industry from 2 to 6, to capture the 6 geopolitical zones. He is also seeking the removal of the Minister of Finance and the Minister of Petroleum Resources from the board of the two agencies.
  • The Nigeria LNG Limited (NLNG) said Nigeria's LPG supply to the domestic market remains undermined by the lack of capacities on the part of the marketers to offtake the 450,000 MT per annum the company allocated to the Nigerian market. The company attributed the challenge to lack of storage capacity, lack of terminal access, draft restrictions, and prioritization of other products over LPG.
  • The GMD of NNPC, Mele Kyari has said that the increase in the prices of gas, instigated by the reimposition of VAT and dwindling exchange rate, could push up the prices of crude oil per barrel in Nigeria by $10 in the next 3-6months.
  • The Minister of State for Petroleum Resources, Timipre Sylva, said Nigeria has petitioned the Organisation of Petroleum Exporting Countries and its allies for an increase in the country's oil quota. He said the government foresees output rebound to 1.7 million b/d by November and 2.0 million b/d by the end of the year.

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  • Oil prices dipped on Monday, extending last week's losses after the U.S. dollar jumped to a three-week high and the U.S. rig count rose, although nearly a quarter of U.S. Gulf of Mexico output stayed offline in the wake of two hurricanes.
  • Over 40 members of the European Parliament from different political groups have urged the European Commission to launch an investigation into Russian gas giant, Gazprom, over alleged market manipulation which may have contributed to the record-high natural gas prices in Europe.
  • Analysts have observed that the soaring gas prices could push up winter fuel bills, hurt consumption and exacerbate a near-term spike in inflation. They noted that the hike in gas prices may be another blow to the world economy.
  • Britain's Junior Business Minister, Paul Scully, said talks are ongoing with the energy regulator, Ofgem, about whether a cap on gas and electricity prices for consumers should go up in October given the increasing gas prices.
  • With about 16 Percent of Crude Oil Production in the Gulf of Mexico Still Offline, U.S. oil refiners are hunting to replace crude lost to the Hurricanes. U.S. refiners are turning to Iraqi and Canadian oil, while their Asian buyers are pursuing the Middle Eastern and Russian grades.
  • Oil prices steadied on Friday near a two-month high of $77.50 a barrel and were headed for a third straight week of gains, supported by global output disruptions and inventory draws.
  • Brent had a weekly growth of 4.09% (see Table 1).

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Gold declined by -0.10% while Silver also dipped by -0.20% W-o-W (see Table 1).



  • Cocoa prices depreciated by -2.85% this week.
  • Corn prices declined by -0.09% W-o-W while Sugar appreciated by 4.23% (see Table 1).


Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: CNBC, Proshare Research

*Data for 24th September 2021 is as of 5:26pm (Nigerian Time)


  • In the coming week, oil prices are expected to grow steadily supported by global output disruptions and inventory draws.
  • Gold prices are expected to decline in the coming week, as interest rate hikes loom.
  • Cocoa prices to be little changed in the coming week as improving conditions in West Africa's cocoa-growing regions could lead to record cocoa crops in 2021/22, which could further pressure cocoa prices.
  • Sugar prices are expected to appreciate next week as Indian mills hold off on signing new sugar export deals as local prices jump.
  • Corn prices are expected to be mixed next week as concerns about tighter global supplies due to adverse weather conditions.

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Fixed Income and Money Market 


Currency Market

On a week-on-week basis, the Naira depreciated in value, at the I & E FX window, the domestic currency fell by +0.49% to N414.90/US$ at the close of trading on Friday. The continues to trend downward despite the +2.02% growth in the foreign reserve.


The Naira closed the week at $/N414.90 at the I&E FX window, at the NAFEX (spot market) it closed at $/N412.43


Average Benchmark Yields



% Change

I & E FX Window








Source: FMDQ, AbokiFX, Proshare Research


Money Market

Despite the liquidity inflow in the week, money market rates remained elevated supported by the primary market auction by DMO at the middle of the week.


At the close of the session on Friday, money market rates closed at 16% and 17.25% for open buy-back and over-night rates respectively. On a W-o-W basis, OBB fell by -3.03% while O/N also dropped by -2.82%.

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.

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Treasury Bills Market

The Nigerian Treasury Bills market was mostly tepid this week as attention was on the Eurobond and bond issued during the week.


At the close of the market on Friday, average benchmark yields for T-bills closed at 5.61%, OMO bills at 6.43% while average benchmark for CBN's special bills closed at 6.04%. Indicating a W-o-W rise of +0.71% for the T-bills, +1.37% and -0.66% for OMO bills and the special bills respectively.


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

Sentiment in the bond market was mixed this week, at the close of trading on Friday bulls dominated as we saw buying interest across the board.


The overall average benchmark yields closed at 8.52% at the close of trading at the end of the week, which dipped W-o-W by -0.72%.


Average Benchmark Yields



% Change

Short Tenor (%)




Mid Tenor (%)




Long Tenor (%)




Source: FMDQ, Proshare Research 

At today's bond auction, the DMO offered N150.00 billion worth of FGN FEB 2028, FGN MAR 2036 and FGN MAR 2050, with stop rates of 11.60%, 12.75% and 13.00%, respectively. N277.05bn was allotted.


FGN Eurobond Market

With an additional three Eurobonds issued this week, we now have a total of thirteen (13) Eurobonds and one (1) Diaspora Bond in Issue.


The Debt Management Office (DMO) on behalf of the Federal Government of Nigeria successfully accessed the international capital market on Tuesday, issuing $4.0 billion in Eurobonds. The issuance was spread across three tenors, $1.25 billion on the 7-year, $1.5 billion on the 12-year and $1.25 billion on the 30-year instrument, with respective yields at 6.125%, 7.7375% and 8.250%. Total subscription was $12.2 billion, indicating the instrument was oversubscribed by 4.1x.

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Nigerian Capital Market

  • Activity on the local bourse this week was bearish, however the benchmark index experienced a reversal on Friday with interests seen in several stocks. The NGXASI closed the week with a growth of +0.05% The Nigerian Stock Exchange gained N9.59bn, year-to-date return moderated to -3.25%, while the market capitalization settled at N20.30trillion.
  • The volume and value of stocks traded on the exchange this week advanced by +50.71% and +29.48% respectively.
  • Sectoral performance across sectors tracked was mixed this week as the NGX Insurance was the highest gainer for the week with +1.75%. NGX Oil and Gas, NGX-IND with +1.38%, +0.23% while NGX Consumer Goods and NGX Banking closed negative with -0.04% and -0.43% respectively.
  • Market breadth for the week closed positive with 28 gainers led by PHARMDEKO and NAHCO as against 23 losers led by SCOA and PRESCO

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Chart 1: Movement of NSEASI Index Points 17 Aug. 2021-24 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 742.70 points and N645.54 with a growth of +0.95% and +0.95% respectively.


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Dangote and Toni Index   

Dangote Index closed the week positive with 128.96 basis points from 128.91 basis points recorded the previous week, representing a growth of +0.04%.

DANGCEM and DANGSUGAR  closed flat while NASCON recorded a growth of +4.59% W-o-W.



Table 1: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed negative with 101.44 basis points from 101.80 basis points recorded the previous week, a W-o-W decline of -0.35%.


UBA and UBCAP closed the week negative with -1.32% and -3.37% respectively while, TRANSCOHOT and AFRIPRUD closed the week positive with +10.00% and +3.23%. TRANSCORP remained flat W-o-W.


Table 2: Toni Index W-o-W Change

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As sentiment remains weak, we expect a choppy performance on the bourse in the coming week as its likely for savvy investors to take advantage of the lower prices of stocks with good fundamentals. However, 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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