What To Expect From The Markets This Week - 310521

Proshare

Saturday, May 29, 2021 07:20 AM / Proshare Content / Header Image Credit: EcoGraphics


Proshare Nigeria Pvt. Ltd.
 


Nigeria: Economic Dashboard @ 280521 

Proshare Nigeria Pvt. Ltd.



Editor's Note

Source: Proshare Research - May 29, 2021

Nigeria Economy

  • Nigeria's Gross Domestic Product (GDP) grew by +0.51%(year-on-year) in real terms in the first quarter of 2021, marking two consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020. The Q1 2021 growth rate was slower than the +1.87% growth rate recorded in Q1 2020 but higher than +0.11% recorded in Q4 2020, indicative of a slow but continuous recovery. Nevertheless, quarter on quarter, real GDP grew at -13.93% in Q1 2021 compared to Q4 2020, reflecting a generally slower pace of economic activities at the start of the year.
  • According to the NBS selected price watch data for April 2021, the average price of 1 dozen Agric eggs medium size increased Y-o-Y by +11.26% and month-on-month by +1.13% to N530.40 in April 2021 from N524.47 in March 2021 while the average price of a piece of Agric eggs medium size (the price of one) increased year-on-year by +18.32% and month-on-month by +1.47% to N49.14 in April 2021 from N48.43 in March 2021. The average price of 1kg of tomato increased year-on-year by +0.09% and month-on-month by +3.67% to N277.26% in April 2021 from N267.45 in March 2021. The average price of 1kg of rice (imported high quality sold loose) increased year-on-year by +14.57% and declined month-on-month by -0.67% to N540.58 in April 2021 from N544.21 in March 2021. Similarly, the average price of 1kg of yam tuber increased year-on-year by +9.87% and month on month by +3.26% to N252.80 in April 2021 from N244.82 in March 2021.
  • The Bank of Industry reported that its total assets grew by +78.85% from N1.04trn to N1.86trn. The rise was largely attributed to the successful debt syndications of €1bn and $1bn that was concluded in March and December 2020 respectively. Furthermore, its equity rose by +15.3% from N293.08bn in the previous year to N336.48bn in 2020 while its loans and advances grew by +1.3% to N749.84bn. Its profit before tax declined by -9.6% to N35.54bn, attributed to the challenging environment in the economy. The Chairman of the Bank, Mr. Aliyu Dikko noted that it facilitated the disbursement of N2.5bn and N1.2bn under the N-Power and Government Enterprise and Empowerment Programs to 300,011 and 109,039 beneficiaries respectively.
  • According to its disclosed circular titled 'New license requirements for the payment system', the Central Bank of Nigeria set a new capital requirement for payments firms in the country. It stated that to have a Payment Terminal Service Provider license, a firm was required to have N100m shareholders' funds unimpaired by losses. It retained super agent's license at N50m, Switching and Processing firm's license at N2bn; Mobile Money Operator's license at N2bn; Payment Solution Services at N250m and Payment Solution Service Provider at N100m. The CBN specified a non-refundable application fee of N100,000 via the licensing fees. According to the capital requirements, the payment firms must have an escrow refundable N2bn into the CBN PSP share capital deposit account.
  • The Monetary Policy Committee (MPC) voted unanimously to retain all parameters constant. This was disclosed by the CBN Governor, Godwin Emefiele while reading the communique at the end of the MPC meeting on Tuesday 25 May 2021. The MPR was retained at 11.5%, the asymmetric corridor of +100/-700 basis points around the MPR, and CRR was retained at 27.5%.


Proshare Nigeria Pvt. Ltd.

Global Economy

  • China has overtaken Germany to become the UK's biggest single import market for the first time since records began. According to the Office for National Statistics, Goods imported from China rose 66% from the start of 2018 to 16.9bn pounds in the first quarter of 2021 while imports from Germany fell by a quarter to 12.5bn pounds in the same period. The change in trade could be attributed to the uncertainty caused by the Brexit negotiations and the pandemic boosted demand for Chinese goods.
  • Australia's second-most populous state of Victoria will enter a one-week COVID-19 lockdown forcing its near seven million residents to remain home except for essential business as authorities struggle to contain a highly infectious outbreak.
  • According to the Chinese National Bureau of Statistics, earnings at China's industrial firms grew at a slower pace in April, with high commodity prices and weaker performance in the consumer goods sector limiting the overall profitability from manufacturing. Profits at China's industrial firms rose 57% Y-o-Y in April to 768.63bn yuan, a decline from 92.3% in March. For the January-April period, industrial firms' profits grew 106% from the same period a year earlier to 2.59trn yuan, bolstered by a virus-related plunge in activity early last year.
  • The EU is considering hitting Belarus's big potash exports as well as its oil and financial sectors with new sanctions, as punishment for forcing down a Ryanair flight to arrest a dissident journalist. Foreign ministers gathering in the Portuguese capital on Thursday said they were targeting sectors that play a central role in the Belarus economy, to inflict real punishment on President Alexander Lukashenko.


Proshare Nigeria Pvt. Ltd.


Commodities Market

Weekly Review and Outlook

Energy

Domestic

  • On Tuesday, the Nigerian National Petroleum Corporation (NNPC) and Bonga Production Sharing Contract (PSC) partners signed watershed agreements to unlock about $700m revenue to the federation and free the parties from billions of dollars in contingent liabilities. The agreement saw the renewal of Oil Mining Lease 118 for another 20 years.
  • The Department of Petroleum Resources (DPR) On Wednesday stated that Nigeria requires about $2 billion monthly in revenue to remain sustainable. The Director, DPR, Sarki Auwalu said there is need to upscale the nation's oil reserve and monetise gas to generate more revenue given the sector's over 70% contribution to monthly fiscal revenue. 
  • The chief Operating Officer of NNPC, on Thursday, said the cooperation is in advanced talks stage with Dangote Industries to acquire a 20 per cent stake in the 650,000 bpd Dangote oil refinery. He said the decision is majorly to ensure undisrupted product supply to Nigerians and that the risk associated with refinery business does not weigh solely on Dangote Industries.

 

 Proshare Nigeria Pvt. Ltd.


Foreign

  • Oil prices went up on Monday recouping some of last week's losses as a potential obstacle emerged in reviving the 2015 Iran nuclear deal that could add more oil supply, with indirect talks between Washington and Tehran due to resume this week.
  • President Biden, through the Department of Homeland Security (DHS), said on Tuesday that it will soon roll out plan of actions together with pipeline companies on how to strengthen protections against cyberattacks following the Colonial Pipeline hack.
  • Despite the recent International Energy Agency (IEA) roadmap to net zero emission in 2050, countries such as UK, Japan, Australia, and Norway are showing little commitment to the global target.
  • Oil prices pressed higher on Friday, Brent moving close to $70 a barrel, as positive U.S. economic data and expectations of a strong rebound in global fuel demand in the third quarter reinforced the market.
  • Brent had a weekly growth of 4.81% (see Table 1).


Metals

Gold appreciated by 1.22% while Silver also gained by 1.46% W-o-W (see Table 1).

 

Agriculture

  • Cocoa prices appreciated by 0.98% this week.
  • Corn prices dipped by -1.02% W-o-W while Sugar gained by 4.39% (see Table 1).

 

Table 1Weekly Change in Commodity Prices

Commodity

28-May-21

21-May-21

31-Dec-20

Weekly Chg

YTD Chg

Brent

69.76

66.56

51.8

4.81%

34.67%

Gold

1898.16

1875.27

1898.67

1.22%

-0.03%

Silver

27.86

27.46

26.4011

1.46%

5.53%

Cocoa

2464

2440

2597

0.98%

-5.12%

Corn

657.5

664.25

484

-1.02%

35.85%

Sugar

17.37

16.64

15.28

4.39%

13.68%

Source: Bloomberg, Proshare Research

*Data for 28th May 2021 is as of 5:28pm (Nigerian Time)

 

Outlook

  • In the coming week, oil prices are expected to be bullish as strong U.S. economic data and expectations of a rebound in global demand will outweigh concerns about more supply from Iran once sanctions are lifted.
  • Gold prices are expected to rise marginally in the coming week, as U.S. inflation ticks up which is favourable towards the precious metal.
  • Cocoa prices to decline next week on despite grindings up in North America and Southeast Asia.
  • Sugar prices are expected to rise next week due to the sugar supply shortage in Brazil and Thailand, as India mills sign sugar export deals without government subsidy.
  • Corn prices are expected to be bullish next week on continued demand from China and U.S. Department of Agriculture's (USDA) planting progress report.


Proshare Nigeria Pvt. Ltd.

Fixed Income and Money Market 

Currency Market

It was a bearish market for the Naira both at the official window and BDC window this week which was attributed to the decision of the CBN adopting the NAFEX rate on its website after the MPC meeting held in the week.

 

On a W-o-W basis, the Naira depreciated against major currencies at the BDC window. It depreciated against the US dollar, British Pound, and Euro by +1.66% +1.47%, +1.88% respectively closing at $/N490, £/N690, and €/N595 at the BDC window.

 

At the I & E FX window, the Naira was flat on a week-on-week basis.

 

The Naira closed the week at $/N412.0 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.00.

 

 

21-May-21

28-May-21

% Change

I & E FX Window ($/N)

412

412

-

NAFEX ($/N)

410.71

411.00

+0.07%

BDC ($/N)

482

490

+1.66%

Source: FMDQ, AbokiFX, Proshare Research

 

Money Market

Funding rates continued their double-digit trend this week which was supported by constrained system liquidity which opened in a deficit of N296bn this week.

 

Funding rates rose at the close of the week. Open Buyback (OBB) closed at 18.67% while Overnight (O/N) rates closed at 19.17% indicating a Week-on-Week (W-o-W) rise of +13.15% for OBB and +12.76% for O/N rates.

 

Money Market Rate

 

21-May-21

28-May-21

% Change

OBB (%)

16.50

18.67

+13.15%

O/N (%)

17.00

19.17

+12.76%

Source: FMDQ, Proshare Research


Funding rates are expected to trend in double digits in the coming week.

 

Treasury Bills Market

The overall trading session of the Nigerian Treasury Bills market was bearish as investors' attention was skewed towards the Treasury bills auction by DMO.

 

At the close of the week, the average benchmark yield for T-bills was rose by +5.89% to close at 6.10% while OMO bills rose by +3.92% W-o-W to close at 9.59%.

 

Average Benchmark Yields

21-May-21

28-May-21

% Change

T. Bills (%)

5.76

6.10

+5.89%

OMO Bills (%)

9.23

9.59

+3.92%

SPEB

8.87

-

-

Source: FMDQ, Proshare Research

 

We expect the activity in the treasury bills market to remain subdued next week as system liquidity remains relatively tight.

 

The DMO sold N151.11 billion worth of notes against N63.16 billion offered at its NTB auction this week. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, & 9.65% respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper fell by 10bps

 

The CBN offered N50 billion worth of OMO notes but sold N41.00 billion at its auction this week. The 96-day, 180-day & 348-day notes were allotted at 7.00%, 8.50% and 10.10% respectively.

 

FMDQ Securities Exchange Limited through its Board Listings and Markets Committee approved the quotation of the TrustBanc Holdings Limited ₦0.20 billion Series 1 CP under its ₦10.00 billion CP Issuance Programme on its platform.

 Proshare Nigeria Pvt. Ltd.

FGN Bond Market

The FGN bond market started the week on a relatively quiet note as attention was drawn to the outcome of the MPC meeting, however, towards the end of the week, activity improved which was on the back of liquidity improvement from FAAC disbursement and retail FX refund.

 

At the close of the week, the market was bearish with selling interest seen majorly at the short end and mid-end of the curve.

 

The overall average benchmark yields closed at 10.00% for the week which increased W-o-W by +5.00%.

Average Benchmark Yields

21-May-21

28-May-21

% Change

Short Tenor (%)

6.98

7.57

+8.50%

Mid Tenor (%)

11.27

11.84

+5.08%

Long Tenor (%)

13.62

13.47

-1.14%

Source: FMDQ, Proshare Research 


FMDQ Securities Exchange Limited announced the admission of the BUA Cement PLC ₦115.00 billion Series 1 Fixed Rate Senior Unsecured Bond under its ₦200.00 billion Bond Issuance Programme, for listing on its platform. This issuance, a first by BAU Cement PLC becomes the largest corporate bond issued in the Nigerian debt capital markets. The proceeds from the issuance will be used to refinance existing debt obligations of Bua Cement Plc, finance its working capital as well as fund its Debt Service Reserve Account.

 

FGN Eurobond Market

The Eurobond market traded was bullish for most of the trading session this week amid a continued drop in US treasury yield and improvement in crude prices, although the bullish sentiment was upturned by a rise in the US 10-year treasury yield, which inched up to 1.62%

 

The average benchmark yield closed at 6.08% at the end of the week declining W-o-W by -1.46%.

 

We expect market sentiment to remain soft in the near term in the absence of any trigger.



Proshare Nigeria Pvt. Ltd.



Nigerian Capital Market

  • Nigerian stocks suffered another week of losses as investors sustained their profit taking on the exchange. The Nigerian bourse closed the week negative with a decline of -0.18%. The Nigerian Stock Exchange lost N34.97bn thus, year-to-date return deteriorated to -5.00%, while the market capitalisation settled at N19.94 trillion.
  • The volume and value of stocks traded on the exchange this week advanced by +31.19% and +88.01% respectively.
  • Performance across sectors tracked was mixed negative this week as the NSE Insurance was the highest gainer for the week with +1.01% while NSE Banking recorded the highest decline with -1.80%. NSE Oil and Gas closed positive with +0.85% while NSE-IND, NSE-30, and NSE Consumer Goods closed the week negative with -0.43%, -0.34% and, -0.07% respectively.


 Proshare Nigeria Pvt. Ltd.



Chart 1: Movement of NSEASI Index Points 21 May. 2021 - 28 May. 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 negative movement in Market capitalization and NSI. The NSI and Market capitalization closed the week at 752.30 points and N534.74bn with a decline of -2.73% and -2.73% respectively.

 

 

 Proshare Nigeria Pvt. Ltd.



Dangote and Toni Index  

Dangote Index closed the week positive with 112.79 basis points from 111.56 basis points recorded the previous week, representing a growth of +1.10%.


NASCON closed flat, DANGSUGAR declined by -2.33% while DANGCEM appreciated by +1.19% WoW resprectively. DANGCEM recorded the highest gain W-o-W.

 

 

Table 2: Dangote Index W-o-W Change

 Proshare Nigeria Pvt. Ltd.



Furthermore, the Toni Index closed negative with 91.64 basis points from 91.97 basis points recorded the previous week, a W-o-W decline of -0.36%


AFRIPRUD, TRANSCORP  and UBCAP all closed the week positive with +6.67%, +1.14% and +2.47% while TRANSCOHOT  closed flat W-o-W and UBA closed negative with -1.38%.


 

Table 3: Toni Index W-o-W Change

Proshare Nigeria Pvt. Ltd.


 

Outlook

 

In the coming week, we expect the bearish sentiment in the market to persist however, press releases from listed companies and other macroeconomic developments is likely to impact investors’ decisions.

 

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



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.




Proshare Nigeria Pvt. Ltd.

Previous Week(s) Market Outlook

1.      What To Expect From The Markets This Week - 170521

2.     What To Expect From The Markets This Week - 100521

3.     What To Expect From The Markets This Week - 030521

4.     What To Expect From The Markets This Week - 260421

5.     What To Expect From The Markets This Week - 190421


Proshare Nigeria Pvt. Ltd.


Latest Reports This Past Week

1.      Average Prices of 1kg of Tomato Increased by 0.09% YoY in April 2021 - NBS

2.     Average Fare Paid by Commuters for Intercity Bus Journey Increased by 1.48% MoM in April 2021 - NBS

3.     Nigeria's Real GDP Grew by 0.51% YoY in Q1 2021 - NBS

4.     Average Prices of PMS, AGO, HHK and Cooking Gas - April 2021

5.     Headline Inflation Increases by 18.12% YoY In April 2021, 0.05% Lower Than March 2021 Rate - NBS

6.     416 Movies Produced in Q1 2021 - NBS

7.      N392.77bn Generated as CIT in Q1 2021 - NBS

8.     N496.39bn Generated as VAT in Q1 2021 - NBS


Proshare Nigeria Pvt. Ltd.



Related News

1.     Investors Lose N98.57bn, NSEASI Dips by -0.49% as Sell Pressure Persists

2.    Investors Loses N12.03bn as NSEASI Dips Marginally by -0.06% Amid Positive Market Breadth

3.     Investors Lose N16.06bn as NSEASI Dips by -0.08% Amid Positive Market Turnover

4.    Investors Loses N19.03bn as NSEASI Dips by -0.10% to Open the Week Negative



Proshare Nigeria Pvt. Ltd.



Read More - The Monthly Proshare CONFIDENTIAL  

1.      Hospitality Post-COVID-19: Making the Future Count    

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

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

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

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

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

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

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

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

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

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

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

13.  Budget 2019: The Hidden Monsters

14.  Surviving Uncertain Times in the Nigerian Financial Market

15.  The Rich, The Poor and Buharinomics

16.  Nigerian Banks- Performance - H1 2018

17.  AMCON and Financial Services Debt Burden in Nigeria

18.  Poverty Tracker and Nigeria: Raising The Red Flag

19.  POCKET Economics: Addressing Income Inequality

20. The Silent Drug Epidemic: A Gathering Storm

21.  Judging IMF's Position on Development Indices

22. Money Market: The Folk Road

23. The Headache of Missing Targets

24. 2018 Outlook on the Nigerian Economy: The Need for an Even Keel

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

26. 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