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Nigeria: Economic Dashboard @ 010121
Source: Proshare Research - December 26, 2020
- 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.
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
- 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.
- 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
- 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.
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 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 1: Weekly Change in Commodity Prices
Source: Bloomberg, Proshare Research
*Data for 31st Dec, 2020 is as of 4:35 pm
- 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.
prices are expected to rise as real yields continue trading in the negative
territory and the imminent approval of the relief package.
coronavirus strain to disrupt cocoa supply to Europe, keeping prices high
cane output and dwindling demand to keep sugar prices low.
prices to rise during the coming week, as China continues to ramp up its demand
for U.S. grains
Fixed Income and Money Market
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%.
expected to trend lower in the absence of funding obligations.
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.
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.
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%.
in the NTB market is expected to continue its quiet trend as a result of the
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.
the market to continue in a quiet trend in the coming week.
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.
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).
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, Â£/N626,
Nigerian Capital Market
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 by +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.
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.
Chart 1: Movement of
NSEASI Index Points 24Dec. 2020 - 31Dec. 2020
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.
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
Table 2: Dangote Index W-o-W Change
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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