What To Expect From The Markets This Week - 041021


Saturday, October 02, 2021 06:50 AM / Proshare Content / Header Image Credit: EcoGraphics

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Nigeria: Economic Dashboard @ 011021  

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Editor's Note

Source: Proshare Research - October 02, 2021

Nigeria Economy

  • Earlier in the week, the House of Representatives passed the 2022-2024 MTEF/FSP as presented by the President, Major General Muhammadu Buhari (retd.). Following the consideration of the report by the House Committee on Finance at the plenary on Tuesday, the house retained most of the parameters originally proposed in the paper. The committee recommended daily crude oil production of 1.88 mbpd, 2.23mbpd, and 2.22mbpd for 2022, 2023, and 2024, respectively, given a three-year average of 1.93mbpd. The panel also recommended that the proposed benchmark oil price of $57per barrel for 2022 and $55 for 2023 and 2024 be approved while proposing that the exchange rate of N410.15/$ be retained as proposed.
  • At the 2021 World Tourism Day celebration, Minister of Information and Culture, Alhaji Lai Mohammed stated that other states should take a cue from Kebbi which has offered a lot to the world in terms of Tourism. The states' tourism sector revolves around components such as culture, agriculture, and sports, among others. In the areas of culture and sports, the annual Argungu International Fishing Festival, the Durbar, traditional wrestling, and camel racing, among others, have over the years proven to be viable sources of economic growth.
  • The Nigerian Export-Import Bank has said it has earmarked a minimum of N1bn for every state of the federation to fund export-oriented projects in the Small and Medium Scale Enterprises sector of all the states. The bank said this fund would promote regional industrialisation and economic development. Managing Director and Chief Executive of NEXIM, Mr. Abba Bello noted that the funds can help states benefit from the opportunities provided by the African Continental Free Trade Agreement while also helping to capture the huge volume of informal trade which has been estimated at four times the value of recorded trade.
  • According to BudgIT's recently released report titled 'State of States, 2021 edition: Fiscal Options for Building Back Better' only three states in Nigeria can survive without support from the Federal Government. The report revealed that only Lagos, Rivers, and Anambra (which are at the top of the 'Index A') can meet their operating expenses obligations with a combination of their IGR and Value Added Tax. The report also noted that the 36 states collectively recorded a 3.43% decline in their 2020 IGRs N1.21tr from N1.26tr in 2019 while the total debt burden of the states increased by N472.63bn (or 8.78%) from N5.39tr in 2019 to N5.86tr in 2020.
  • During an interview with a news media outlet on Thursday, Fiscal Policy Partner and Africa Tax Leader at PwC Mr. Taiwo Oyedele said the forex scarcity seen in recent times is due to a lack of confidence from foreign investors. Oyedele stated that there is around $17tn of investible funds around the world that are attracting either zero  returns or even negative returns and yet it does not seem such funds can be redirected towards the Nigerian economy. The Tax expert attributed this to the premium investors would demand to invest in a risky environment such as Nigeria.
  • The World Bank, in a new report titled 'Steering tertiary education, toward resilient systems that deliver for all' observed that 74 % global growth of youth population aged 18-23 will be majorly in Nigeria and nine other countries from 2015 to 2035. The other countries include Angola, the Democratic Republic of the Congo, Egypt, Ethiopia, Kenya, Niger, Pakistan, Uganda, and Tanzania. They emphasized the need for smart investments and reforms in tertiary education systems.
  • Fitch Ratings, the world's major credit rating agency, has projected that Nigeria's debt-to-revenue ratio will rise to 395% by 2022, indicating that the growth rate in public debt would far outstrip its revenue. The rating agency also stated that debt interest costs would consume 24% of the country's revenue in 2022. Already, Nigeria's debt-to-revenue ratio stood at 91% as of H1 2021. It had risen to 89 % between January and November 2020 before slowing down to the current figure. In a note announcing Nigeria's 'B' rating, Fitch said: "General government (GG) debt will further rise to 32.6% of GDP in 2022, from less than 13% a decade earlier, but will remain much below the forecast 'B' median of 70%.

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Global Economy

  • Goldman Sachs has cut its growth forecast for China, as the country contends with energy shortages. The firm now expects the world's second-largest economy to expand by 7.8% in 2021, down from its previous prediction of 8.2%. The firm says major industrial output cuts caused by power outages have added significant downside pressures. It estimates that as much as 44% of China's industrial activity has been affected.  
  • The Bank of England's Monetary Policy Committee (MPC) voted unanimously to hold its key interest rate at 0.1% while downgrading its GDP and inflation predictions for the rest of 2021. Analysts believe that the bank is in a" wait-and-see mode". The MPC also voted by a majority of 7-2 for the BoE to continue its existing program of UK government bond purchases. The adjustment of the bank's forecasts increased the CPI inflation projection to over 4% in Q4 2021, due to the rise in energy prices and supply chain issues, though in the medium-term is expected to fall back to close to the 2% target.
  • The Office for National Statistics (ONS) citing accounting changes stated that UK's Gross domestic product in the three months to June grew by 5.5%, up sharply from the earlier estimate of 4.8%. Economists are however of the view that household expenditure was responsible for the upward review. The ONS also revealed that the economy shrank by 1.4 % in the first quarter, improving on the prior estimate of a -1.6% contraction. Meanwhile, consumers and businesses also have to contend with runaway gas prices and a chronic shortage of lorry drivers that led to the panic buying of motor fuel last week.
  • US Consumer confidence index has fallen for the third straight month. The Conference Board's index fell to 109.3 in September from a revised 115.2 reading in August. Economists in a Bloomberg survey had expected an increase to 115.0. The figures suggest that the spread of the delta variant has continued to dent consumers' outlook on the economy and thwart spending on services. While new cases have dipped from the latest peak, they are still rising in some states. At the same time, Americans are paying more for household goods, further weighing on sentiment. Analysts believe that the removal of the pandemic relief money may also have contributed to the drop in consumer confidence.
  • African Export-Import Bank (Afreximbank) and the African Continental Free Trade Area (AfCFTA) Secretariat have announced the commencement of the Pan-African Payment and Settlement System (PAPSS), a financial market infrastructure to enable instant, cross-border payments in local currencies among African markets launched two years ago. 

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Summary and Outlook

As the third quarter draws to a close, analysts expect that GDP growth for the period would moderate relative to the 5.01% recorded in Q2 2021.  With the level of insecurity still high and the compensating base effect from 2020 expected to ease, it is less likely that Q3 2021 GDP growth would exceed 3.5%. The economy had only contracted by -3.62% in Q3 2020 after having contracted by -6.1% in Q2 2020. Meanwhile, Inflation for the month of September is projected to have fallen, although marginally, to about 16.5% as the effect of the much-anticipated harvest season may have been dampened by the level of insecurity in the planting season. General prices appear to also be returning to the pre-harvest season. Analysts have noted that the hike in the price of cooking gas in the period, as well as the increase in prices of imported items (as a result of the fall of the Naira in the parallel market), would have managed to keep inflation high in the period.  

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Commodities Market

Weekly Review and Outlook



  • NNPC, in its latest report, said it spent a total of N905.27bn on petrol subsidy in eight months, from January to August 2021, amid rising global oil prices.
  • A report from OPEC revealed that Nigeria and Angola may continue to struggle to meet OPEC quota for the rest of the year as underinvestment and nagging maintenance problems continue to hobble output.
  • The Nigerian Senate on Tuesday asked international oil companies (IOCs) operating in the Niger Delta region to relocate their headquarters to their respective states of operation.
  • The Major Oil Marketers Association of Nigeria stated that the landing cost of petrol has risen to N278, and subsidy payments may increase as Brent crude price temporarily reached $80 per barrel on Tuesday. 
  • The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Dr. Orji Ogbonnaya has noted that the recent Memorandum of Understanding (M0Us) signed by NEITI with the country's anti-corruption agencies would help Nigeria recover about N2.6 trillion from 77 oil and gas companies.
  • OPEC on Tuesday said that Africa's refining outlook had improved, with Dangote Refinery and other modular facilities accounting for over half of the 1.2 million barrels per day of new capacity expected by 2026.
  • OPEC's 2021 Annual Statistical Bulletin released on Wednesday showed a drop of 543 million barrels in Nigeria's crude oil reserves from 37,453 million barrels in 2016 to 36,910 million barrels in 2020.
  • According to the Global Data report, Nigeria and other nations involved in gas flaring lose up to $82bn annually due to the global gas flaring. 

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  • Oil prices rose for a fifth straight day on Monday with Brent heading for $80 amid supply concerns as parts of the world see demand pick up with the easing of pandemic conditions.
  • Goldman Sachs raised its year-end forecast for Brent crude oil prices to $90 per barrel from $80, as rapid fuel demand recovers from the Delta variant and Hurricane Ida's disruption in productions led to tight global supplies.
  • On Monday, many gas stations ran dry of gasoline in Britain and vendors rationed sales due to shortages of truckers which led to a break in the supply chains. British Government on Tuesday said it has put military tanker drivers on standby to supply gas stations if needed.
  • The Chinese Governor of Jilin Province, amid China's power crunch and soaring coal prices, has urged coal importers to set up multiple channels to guarantee coal supplies from Russia, Mongolia, or Indonesia. Goldman Sachs estimated that about 44% of China's industrial activity has been affected by power shortages. On Wednesday, China's National Development and Reform Commission (NDRC) directed the railway companies and local authorities to strengthen coal transportation in key areas including the northeast region to ensure a stable supply of coal for power generation.
  • Gas prices in Europe and Asia traded about four times over U.S. gas prices due to insatiable demand for fuel in Asia and low stockpiles in Europe ahead of the winter heating season. Gas prices traded near $29 per mmBtu in Europe and Asia but traded around $6 in the United States. Traders believe buyers around the world would keep purchasing all the LNG the United States could produce.
  • A Reuters survey on Friday found that OPEC oil output rose in September to its highest since April 2020, as Nigerian output recovered from involuntary losses and OPEC's top producers further eased supply curbs under a pact with its allies.
  • Oil prices fell on Thursday, as higher U.S. crude oil inventories and a strong dollar outweighed bullishness from supply deficit forecasts.
  • Brent had a weekly growth of 0.76% (see Table 1).

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Gold grew by 0.44% while Silver also dipped by -1.58% W-o-W (see Table 1).



  • Cocoa prices appreciated by 2.51% this week.
  • Corn prices grew by 3.70% W-o-W while Sugar appreciated by 0.50% (see Table 1).


Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: CNBC, Proshare Research

*Data for 30th September 2021 is as of 4:47pm (Nigerian Time)



  • In the coming week, oil prices are expected to grow marginally supported by global output disruptions and swelling inventories.
  • Gold prices are expected to be mixed in the coming week, pressured by the dollar and expectations the Federal Reserve will soon start tapering its economic support.
  • Cocoa prices to rise in the coming week amid smaller production from Ghana coupled with prospect for demand.
  • Sugar prices are expected to appreciate next week as demand picks up.
  • Corn prices are expected to be bullish next week as U.S. corn inventories is expected fall substantially.

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Fixed Income and Money Market 


Currency Market

For most of the trading session this week the Naira appreciated at the I & E FX window, which continued at the end of the week. On a week-on-week basis, the Naira appreciated by +0.37% to N413.38/US$ at the close of trading on Friday.


The Naira closed the week at $/N413.38 at the I&E FX window, at the NAFEX (spot market) it closed at $/N413.53


Average Benchmark Yields



% Change

I & E FX Window








Source: FMDQ, AbokiFX, Proshare Research


Money Market

Multiple SLF inflows supported system liquidity this week causing money market rates to trade lower, for the most part.


However, at the close of the session on Friday, money market rates closed in double digits, at 15.00% and 15.75% for open buy-back and overnight rates respectively. On a W-o-W basis, OBB fell by -6.25% while O/N also dropped by -8.70%.


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 Nigerian Treasury Bills was active this week and had a bullish trend for most of the trading in the week


At the close of the market on Friday, average benchmark yields for T-bills closed at 5.29%, OMO bills at 6.32% while the average benchmark for CBN's special bills closed at 6.03%. Which Indicates a W-o-W fall of -5.70% for the T-bills, -1.71%, and -0.17% 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. 


The DMO sold N115.41 billion worth of notes against N111.87 billion offered at its NTB auction this week. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, and 7.50%, respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper rose by 30bps.

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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 at the shot and mid-end of the curve.


The overall average benchmark yields closed at 8.13% at the close of trading at the end of the week, which rose W-o-W by +4.76%.


Average Benchmark Yields



% Change

Short Tenor (%)




Mid Tenor (%)




Long Tenor (%)




Source: FMDQ, Proshare Research 


FGN Eurobond Market

The Eurobond market was bullish on Thursday, as investors moved into the market to take advantage of the attractive yield level, we saw buying interest at the mid to long end of the curve. Average benchmark yields fell by 3bps to 6.18%

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Nigerian Capital Market

  • The equity market saw a bullish dominance this week, as savvy investors and bargain hunters strategically picked up large cap stocks across various sectors. Activity on the local bourse started the week on a weak note but the benchmark index experienced a reversal mid-week. The NGXASI closed the week with an uptick of +3.23%. The Nigerian Stock Exchange gained N655.89bn, year-to-date return moderated to -0.12%, while the market capitalization settled at N20.96trillion.
  • The volume and value of stocks traded on the exchange this week advanced by +69.46% and +16.25% respectively.
  • Sectoral performance across sectors tracked was positive this week as the NGX-IND was the highest gainer for the week with +6.65%. NGX Insurance recorded the highest weekly loss with -7.58%. NGX Consumer Goods, NGX Oil and Gas, and NGX Banking closed positive with +3.35%, +0.92% and +0.60% respectively.

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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 negative movement in Market capitalization and NSI. The NSI and Market capitalization closed the week at 733.06 points and N637.16 with a decline of -1.30% and -1.30% respectively.


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Dangote and Toni Index   

Dangote Index closed the week positive with 146.46 basis points from 128.96 basis points recorded the previous week, representing a growth of +13.57%.

DANGCEM, DANGSUGAR  and NASCON  recorded a growth of +14.29%, +1.16% and +2.70% W-o-W.



Table 1: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed positive with 103.33 basis points from 101.44 basis points recorded the previous week, a W-o-W growth of +1.86%.

UBA, UBCAP, TRANSCORP and TRANSCOHOT closed the week positive with +4.07%, +0.67%, +1.08% and +9.70% respectively while AFRIPRUD closed the week negative with -3.91% W-o-W.


Table 2: Toni Index W-o-W Change

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We expect a mixed performance on the bourse in the coming week due to profit taking activities as well as bargain hunting by savvy investors. 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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