What To Expect From The Markets This Week - 120721


Saturday, July 10, 2021 07:00 AM / Proshare Content / Header Image Credit: EcoGraphics

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Nigeria: Economic Dashboard 090721

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Editor's Note

Source: Proshare Research - July 10, 2021

Nigeria Economy

  • The Nigerian Senate on Wednesday approved the request of President Muhammadu Buhari to take new external loans amounting to N2.34tn to fund the deficit in the N13tn 2021 Appropriation Act. The proceeds are expected to be used to fund various specific capital projects especially in specific priority sectors of the economy such as Power, Transportation, Agriculture, and Rural Development, Education, Health, Provision of counterpart funding for Multilateral and Bilateral Projects, Defence and Water Resources.
  • On Wednesday, the Senate passed the N982.729billion supplementary budget into law. The appropriation committee had reviewed the original amount of N895.842 billion upwardly by N86.9 billion. An analysis of the budget shows that N123,332,174,164 billion is allocated for Recurrent (Non-Debt) Expenditure; and N859,397,521,179 billion as a contribution to the Development Fund for Capital Expenditure.
  • According to the International Monetary Fund, Nigeria currently faces a six-year delay in achieving Sustainable Development Goals.  In a statement released on Tuesday, The IMF president noted that achieving the SDGs will be even more challenging as the financing needs of the SDGs increase by an annual average of $60bn per year for low-income countries. This, therefore, would account for the lengthening of the journey to achieving the development goals in the case of Nigeria by six years and in that of Rwanda by five years.
  • The Federal Government earlier in the week stated that the proposed Funtua, Katsina State Integrated Textile, and Garment Park, will create at least 10,000 direct jobs and 60,000 indirect jobs for Nigerians when it becomes fully operational. According to a senior official of Nigeria Export Processing Zone, the Federal Government has spent N500 million on the project, and that it is expected that the project would be completed in 18 months.

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Global Economy

  • The IMF raised its global growth forecast to 6% in 2021 and 4 % in 2022, stating that it recognized the exceptional and synchronized fiscal and monetary actions by policymakers around the world to cushion the impact of the crisis. The IMF however notes that there is a likelihood of a two-track recovery as countries with strong capacity to support their economies and have high rates of vaccinations have positive outlook while those with limited policy space and delayed vaccinations may fall behind.
  • According to a report released by the U.S. Department of Labor on Thursday, the number of Americans filing for unemployment benefits has increased by 2,000 persons from the previous week to 373,000 persons, this follows optimism earlier fueled by last week's data on the 850,000 new jobs created in June.
  • The Chinese National Bureau of Statistics announced in the week that producer inflation peaked and started to ease in June as a stronger US dollar and government policies helped to moderate commodity prices. The producer price index rose 8.8 % from a year earlier after surging as high as 9 % in May. Meanwhile, Consumer prices increased to 1.1 % from a year ago, lower than in May and below the estimate of 1.2 %.
  • According to the Governor of the Bank of England, Andrew Bailey, the rise in the country's inflation is expected to be temporary. He however warned that if pent-up demand fails to reduce or supply chains fail to keep up, the rise may persist in the near term or for the rest of this year. The Governor stated that monetary authorities are prepared to respond with the tools of monetary policy.
  • According to LinkedIn data, India's hiring rate has recovered moderately by +25% points from 10 % in April to 35 % in May 2021, but the aftermath of the second COVID-19 wave has left professionals in India increasingly vulnerable to economic uncertainty. India's hiring rate on LinkedIn had dropped by -40% points from 50% % in March 2021 to 10 % in April 2021. However, young professionals still experience the knock-on effect of the pandemic, being that the average time taken by new graduates to get engaged has increased from 2 to 3 months," according to LinkedIn.

Summary & Outlook

In the week, Fiscal authorities were active, first, we saw the passage of the supplementary appropriation bill and then the senate approval of the proposed N2.3trn external loan. The Appropriation committee had decided to upwardly review the original supplementary budget from N895bn to N982.7bn to more adequately meet pressing needs for military arms and equipment. However, the fact that N722.4bn of the amount is to be borrowed, given the debt position of the country further suggests, that the country may be approaching the fiscal cliff.  Analysts, while citing the Q1 Debt service to revenue generated ratio of 98% note that the fiscal position of the country does not exactly provide for sustainable growth.  The Federal Government however prefers to look at the Debt-GDP ratio of 21% which is still lower than the IMF prescribed threshold of 25% for developing countries.

Meanwhile, we anticipate the release of June inflation figures in the middle of the month while the MPC is expected to meet later in the month. The MPC's stance has for some time been aimed at striking a balance between stimulating growth and containing inflation. Inflation data for the month of May shows that headline inflation eased to 17.93% from 18.12% but analysts foresee a rise in inflation in June owing to an increase in the price of Diesel, increased levels of insecurity and exchange rate pressures.

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Commodities Market

Weekly Review and Outlook



  • The GMD of Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari on Monday said the NNPC in collaboration with other oil exploration and production companies operating in Nigeria has brought down the cost of oil production in the country by 30 percent. He said they used contract renegotiation and discounts with contractors and launched the National Upstream Cost Optimisation Programme.
  • Prof. Yemi Osinbajo, OPEC, NNPC, DPR, and other stakeholders on Tuesday kicked against plans to end investment for fossil fuels and the financing of net-zero ambition.
  • The Minister of Finance, Zainab Ahmed, on Wednesday amid growing oil prices said Nigeria will set a crude oil benchmark price of $57 per barrel at 1.88 million barrels a day for its 2022 budget.
  • Nigeria's oil output recorded the largest drop in June despite an increase in the combined crude oil production by OPEC and its allies in June. 


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  • Oil prices remain steady on Monday as investors and traders awaiting the crucial talks by OPEC following the disagreement over output within the group that could lead to major producers opening up their taps to gain market share.
  • United Arab Emirates (UAE) on Monday maintained that it accepts a proposal to raise output in stages by about 2 million bpd from August to December 2021 but rejects an extension of cuts beyond April 2022 without adjusting its baseline production.
  • The International Energy Agency (IEA) on Monday noted that the rebound in global gas demand to 2024 following a record fall last year is set to knock down the global climate goal of achieving net-zero emissions by 2050.
  • The former US Energy Secretary, Dan Brouillette, on Tuesday opined that oil prices could very easily hit $100 a barrel in the aftermath of the failed OPEC+ talks, and on the flip side, it possibly could collapse.
  • According to sources from Russia on Thursday, Russia is leading efforts to close the divisions between Saudi Arabia and the United Arab Emirates to help strike a deal to raise oil output in the coming months.
  • Bloomberg on Wednesday reported that the US shale producers have started boosting their hedges to lock in the price of oil they plan to pump in the coming months.
  • India's newly appointed Petroleum Minister, Hardeep Singh Puri, on Thursday, said it plans to boost domestic production of oil and gas and increase the role of natural gas in the country's energy mix as India works toward a $5-trillion economy.
  • Oil prices started Friday mixed but rose over $1 later in the day yet heading for a weekly loss as uncertainty about global supplies fuelled by the OPEC+ impasse weighs in on the optimism from a draw in U.S. inventories.
  • Brent had a weekly decline of -0.36% (see Table 1).


Gold appreciated by 1.42% while Silver dipped by -0.95% W-o-W (see Table 1).

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  • Cocoa prices declined by 0.95% this week.
  • Corn prices declined by -11.72% W-o-W while Sugar depreciated by -5.59% (see Table 1).


Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: Bloomberg, Proshare Research

*Data for 2nd July 2021 is as of 4:27pm (Nigerian Time)



  • In the coming week, oil prices are expected to be bearish amid uncertainty over global supplies after an OPEC+ impasse.
  • Gold prices are expected to hold steady in the coming week, given concerns over the U.S. labour market recovery and Delta coronavirus variant.
  • Cocoa prices to be bearish next week as the market struggles to absorb excess supplies following bumper harvests in top growers Ivory Coast and Ghana.
  • Sugar prices are expected to be rise next week as a recent cold spell cuts cane output expectations in Brazil.
  • Corn prices are expected to be bullish next week amid strong demand from China.

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Fixed Income and Money Market 


Currency Market

The currency market was flat this week at the BDC market while it depreciated at the official window.


It remained flat against the US dollar sold at $/N500, appreciated against the British Pound by -0.56% to close at £/N700, while it remained flat against the Euro at €/N600 on a week-on-week (W-o-W) basis at the BDC window. 


At the I & E FX window, the Naira fell week-on-week by +0.12% and +0.21% at the NAFEX window.


The Naira closed the week at $/N411.75 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.29.





% Change

I & E FX Window ($/N)








BDC ($/N)




Source: FMDQ, AbokiFX, Proshare Research


Money Market

Interbank rates at the beginning of the week contracted significantly due to the increase in system liquidity. However, at the close, rates spiked up, this was propelled by the twin impact of an N142.95 billion Repo and N11.05 billion Standard Deposit Facility outflow which tightened system liquidity at the end of the week.


At the close of the trading session this week, funding rates rose significantly. Open Buyback (OBB) closed at 19.75% while Overnight (O/N) rates closed at 20.50% indicating a W-o-W rise of +64.58% for OBB and +64.00% for O/N rates.


Money Market Rate




% Change

OBB (%)




O/N (%)




Source: FMDQ, Proshare Research


Funding rates are expected to continue their double digits trend in the coming week in the absence of any maturity.


Treasury Bills Market

The overall trading session of the Nigerian Treasury Bill market was mixed.  


At the close of the market on Friday, average benchmark yields for T.bills was up by +4.69% to 6.89% while OMO bills fell marginally by -0.33% W-o-W to close at 9.89%, CBN's Special Bill fell by –0.11%.


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

The Bullish momentum in the Bond market waned at the start of the week as improved offers were seen across the board particularly on the long end of the curve. 


At the close of the week, the overall market was bullish with buying interest seen majorly at the short and mid tenor notes.


The overall average benchmark yields closed at 9.54% for the week which fell W-o-W by -0.81%.


Average Benchmark Yields



% Change

Short Tenor (%)




Mid Tenor (%)




Long Tenor (%)




Source: FMDQ, Proshare Research 


FGN Eurobond Market

With the U.S. on their Independence Day holiday on Monday, activities were muted in the Eurobond market at the start of the week. For most of the trading session this week, the market was quiet, as the decline in crude oil prices overshadowed the impact of the sharp decline in the U.S. 10-year Treasury yields.



We expect market sentiment to remain soft as inflation concerns continue to linger.

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Nigerian Capital Market

  • The Nigerian bourse closed the week on a negative note with a decline of -0.57%. The Nigerian Stock Exchange lost N123.71bn thus, year-to-date return moderated to -5.65%, while the market capitalisation settled at N19.79 trillion.
  • The volume and value of stocks traded on the exchange this week advanced by +15.61% and +34.40% respectively.
  • Sectoral performance across sectors tracked was broadly bullish this week as the NGX Oil and Gas was the highest gainer for the week with +6.53% while NGX Main Board recorded the highest decline with -2.22%. NGX Banking, NGX-30, NGX-IND, NGX Insurance +3.29%, +0.80%,+0.19%,+0.17% respectively while NGX Consumer Goods closed the week negative with -0.32%.
  • Market breadth for the week closed positive with 44 gainers led by UAC-PROP and CUTIX as against 22 losers led by REDSTAREX and ETERNA

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Chart 1: Movement of NSEASI Index Points 02 July. 2021- 09 July. 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 744.39 points and N529.12 with a decline of -1.2% and -1.24% respectively.


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Dangote and Toni Index  

Dangote Index closed the week positive with 121.75 basis points from 121.95 basis points recorded the previous week, representing a decline of -0.16%.


DANGSUGAR  and NASCON declined by -2.99% and -4.76% WoW respectively while DANGCEM recorded a growth of +0.04%. NASCON recorded the highest loss W-o-W.


Table 2: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed positive with 95.17 basis points from 93.34 basis points recorded the previous week, a W-o-W growth of +1.96%.


TRANSCORP, UBA, UBCAP and AFRIPRUD closed the week positive with +3.33%, +2.04%, +0.80% and +4.13% respectively. TRANSCOHOT and closed flat W-o-W.



Table 3: Toni Index W-o-W Change

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In the coming week, we expect the possibility of sustained bargain hunting as investors look to take advantage of good bargains 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.

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