Market Updates | |
Market Updates | |
2609 VIEWS | |
![]() |
Saturday, December 05, 2020 08:00 AM / Proshare Content / Header Image Credit: EcoGraphics
Nigeria: Economic Dashboard @ 041220
Editor's Note
Source: Proshare Research - December 05, 2020
Outlook
Data on Nigeria's foreign trade statistics would be released next week by NBS. The value of Nigeria's total trade fell sharply by -27.3% in Q2 2020 compared to Q1 2020 and -27.46% compared to Q2 2019. It is expected that there would be an improvement in the value of Nigeria's foreign trade in Q3 2020 when compared to Q2 2020 and a decline when compared to Q3 2019.
Global Economy
Commodities Market
Weekly Review and Outlook
Energy
Oil edged
lower on Monday on the doubt about whether the world's top oil producers would
agree to extend its production cuts at OPEC meeting scheduled for November 30
and December 1. However, the talks were postponed to Thursday after
disagreement from the key players on how much oil they should pump amid weak
demand. Adding to the bearishness of the oil market was the build in crude oil
inventories of 4.146 million barrels for the week ending November 27 announced
by the American Petroleum Institute (API).
On Thursday,
OPEC and non-OPEC allies, after days of tense talks, agreed to increase
production by 500,000 barrels per day beginning in January. This will bring the
total production cuts by the start of 2021 to 7.2m barrels per day from 7.7m
barrels per day.
Markets
reacted positively to this bullish news as Brent rose to its highest since
March. Brent recorded a weekly growth of +2.38%
(see Table 1).
Metals
Gold prices
inched up by +2.7%, rebounding from the loss
in the previous week. Silver also appreciated by +5.9%
W-o-W (see
Table 1).
Agriculture
Cocoa prices
depreciated by -4.7% this week, as the tension
between cocoa producers and processors' overpayment of cocoa premium continues.
Corn prices
plunged by -2.09% WoW while Sugar also
depreciated by -2.07% (see Table 1 below)
Table 1: Weekly Change in Commodity Prices
Commodity |
04-Dec-20 |
27-Nov-20 |
31-Dec-19 |
Weekly Chg |
YTD Chg |
Brent |
49.1 |
47.96 |
66 |
2.38% |
-25.61% |
Gold |
1832.1 |
1783.66 |
1517.27 |
2.72% |
20.75% |
Silver |
24.06 |
22.72 |
17.85 |
5.90% |
34.79% |
Cocoa |
2640 |
2770 |
2463 |
-4.69% |
7.19% |
Corn |
422.5 |
431.5 |
388.25 |
-2.09% |
8.82% |
Sugar |
14.63 |
14.94 |
13.42 |
-2.07% |
9.02% |
Source: Bloomberg, Proshare Research
*Data for 4th Dec, 2020 is as of 5:08 pm (Nigerian
Time)
Outlook
Money
Market
Money market
rates for most of the trading session this week were between 0.50% - 1.00% as
system liquidity was fairly robust, however, the rates increased at the end of
the week. The overnight (O/N) rates and open buyback rates closed at 4.25% and
3.63% respectively, this was as a result of FX retail auction which mopped up
some of the system liquidity.
We expect
rates to trend lower in the coming week in the absence of funding obligations
and any other liquidity shocks.
Treasury
Bills Market
The average
benchmark yield remained unchanged at 0.10%, the NTB market started the week on
a quiet note, however, in the week, the CBN introduced Special bills for excess
Cash Reserve Requirement (CRR) via a circular. The market had a mixed reaction
as investors were unsure how to price in the effects of the new instruments.
Although the new instruments are tradeable between banks, retail and
institutional investors and this poses a good opportunity for some
institutional investors with residual liquidity as NTB rates may be elevated.
We expect
participation in the NTB market to remain quiet in the coming week as a result
of the depressed and unattractive yields.
FGN Bond
Market
The bond
market started the week on a lukewarm note as liquidity at the start of the week
weighed on activity. Average benchmark yields rose to 4.20% this week from
4.06% in the previous week, this was in reaction to the 90-day tenor Special
Bill by the CBN which has no coupon rate and the applicable yield at issuance
will be determined by the CBN'.
Also, Edo
State Government is said to sponsor an N25 billion Bond Issuance Programme by River Jamieson SPV Limited, although coupon rate and
applicable yield haven't be set yet according to the document presented.
We expect
the market to continue in this trend in the coming week.
FGN
Eurobond Market
The FGN
Eurobond market continued its bearish trend which was supported by positive
news about the acceptance and distribution of Pfizer-Biotech COVID-19 vaccine
to be distributed in the UK and the news
of OPEC and non-OPEC allies agreeing to increase production by 500,000 barrels
per day beginning in January.
We expect the market participants to continue to react
to events around the global oil price and COVID-19 news.
Foreign
Exchange Market
The week was
an eventful week for the FX market, the Naira was under pressure for most of
the week despite CBN's continuous intervention, however, at the end of the week
the domestic currency appreciated by 421bps to close at $1/N475 this is
following CBN's relaxing restriction on the receipt of international money
transfers in USD (diaspora remittances).
The CBN also
devalued the Naira at the start of the week by N6, the new rates pegged IMTOs
sale of dollar to banks at N388 to $1, banks to CBN at N389 to $1, CBN to BDC
at N390 to $1 and BDC to end-users at not more than N392 to $1.
We expect
the CBN to continue its FX management strategy in supporting the Naira at the
parallel and I & E window.
Chart 1: Movement of NSEASI Index Points 27Nov. 2020 - 04Dec. 2020
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 719.53
points and N534.83bn showing a decrease of -2.24% and -2.24%WoW respectively.
Dangote Index closed the week negative at 106.82 basis points from 110.15 basis points recorded the previous week, an decline of -3.02%. DANGSUGAR and DANGCEM recorded a decline in their share prices except for NASCON which closed flat. DANGSUGAR recorded the highest loss of -5.00% WoW.
Table 2: Dangote Index W-o-W Change
Furthermore, the Toni Index also closed negative
to close at 99.45 basis points from 102.16 basis points recorded the previous
week, a W-o-W decline of -2.65%. AFRIPRUD
advanced in share price while UBA, UBCAP, and TRANSCORP.
Table 3: Toni Index W-o-W Change
Outlook
We expect sustained bullish bias for equities in
the coming week, albeit alongside profit-taking. Furthermore, constriction in translating returns
on domestic investment into the foreign exchange will put pressure on the
Nigerian Stock Exchange.
Contact Us:
To list your events, e-mail business@proshareng.com, WhatsApp 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.
Check out our Events Calendar for event details and follow us on Web, TV, APP and Social Media for updates as the week unfolds. Yours to Serve!
Previous Week(s) Market Outlook
1. What To Expect From The
Markets This Week- 301120
2. What To
Expect From The Markets This Week - 161120
3. What To
Expect From The Markets This Week - 021120
4.
What To Expect From The Markets This Week -
021120
5. What To
Expect From The Markets This Week - 121020
Latest Reports This Past Week
2. FAAC Disburses N639.90bn in October 2020 - NBS
3. GDP by Expenditure: Household Consumption Expenditure
Contracts By -0.08% in Q2 2020 - NBS
4. N416.01bn Generated as Company Income Tax in Q3 2020 - NBS
5.
Nigeria Slips into Recession; Real GDP Contracts by -3.62%
in Q3 2020
6.
NBS Publishes COVID-19 Impact Monitoring Survey
Report for September 2020
7. N424.71bn Generated as VAT in Q3 2020 - NBS
Related News
1. Investors Lose N45.93bn as NSEASI Dips Further by -0.25%,
Closes Below 35,000bpts
2. Investors Lose N41.97bn as NSEASI Dips by -0.26%, Halts
Uptrend
3. Investors Gain N55.17bn as NSEASI Inches Up by 0.30% Amid
Negative Market Breadth
4. Investors Gain N81.84bn as NSEASI Inches Up by 0.45% to
Open the Week Positive
Read More - The Monthly Proshare CONFIDENTIAL
1. Banks in H1 2020: Imagining Beyond COVID-19
2. NSE Ten Years After a Takeover: The Good, The Bad and Undecided
3. NESG v CBN: Beyond the Battleground - The Need for Facts, Perspective and Resolution
4. Roads: Concrete Vision, Asphalt Competition, Looking Ahead.
5. CEO Remuneration 2020 Report: Between 2019 and 2020; Understanding The New Realities
6. Coronanomics (1) - Understanding the Realities of an Impending Recession
7. NCM2020 - Fin. MKT in Transition: Understanding Past Uncertainties; Preparing for New Possibilities
8. Banks' H1 2019 Numbers: Top Line Growth, Bottom Line Uncertainty
9. CEO Remuneration: Making Sense Of The Numbers For Listed Companies In Nigeria
10. Budget 2019: The Hidden Monsters
11. Surviving Uncertain Times in the Nigerian Financial Market
12. The Rich, The Poor and Buharinomics
13. Nigerian Banks' Performance - H1 2018
14. AMCON and Financial Services Debt Burden in Nigeria
15. Poverty Tracker and Nigeria: Raising The Red Flag
16. POCKET Economics: Addressing Income Inequality
17. The Silent Drug Epidemic: A Gathering Storm
18. Judging IMF's Position on Development Indices
19. Money Market: The Folk Road
20. The Headache of Missing Targets
21. 2018 Outlook on the Nigerian Economy: The Need for an Even Keel
22. Nigeria External Economy and the White Noise of Import Dependency
23. States and the Rising Weight of Debt
24. Money Supply: Reeling from Policy Response
25. How Rail and Energy Will Deliver a Robust Economy for Nigeria
26. Too Big Government: The Hysteria of Developmental Quagmire
27.