What To Expect From The Markets This Week - 140621

Proshare

Saturday, June 12, 2021 07:20 AM / Proshare Content / Header Image Credit: EcoGraphics


Proshare Nigeria Pvt. Ltd.
 


Nigeria: Economic Dashboard @ 110621 

Proshare Nigeria Pvt. Ltd.



Editor's Note

Source: Proshare Research - June 12, 2021

Nigeria Economy

  • Federal Executive Council has approved the supplementary budget draft of N895bn. The budget which is to be forwarded to the National Assembly for approval allows for N770bn as Defense spending, N83.56 billion on Johnson and Johnson vaccines, and N1.69 billion for the Nigerian Comprehensive AIDS program. Meanwhile, the National Assembly has promised to expedite the passage of the bill to meet immediate needs

  • According to the figures released by the Debt Management Office on Wednesday Nigeria's debt stock rises by 0.58% in three months as total debt reaches  N33.107tn at the end of March 2021.

  • Ahead of the release of Inflation Data for May, Analysts expect a rise in food inflation on account of worsened Insecurity.  Analysts pencil in 18.2% headline inflation for May up from 18.12% in April.

  • According to NetBlock a British digital company, Nigeria loses over N2 Billion daily due to the Twitter Ban. The company however did not specify whether this economic loss is from advertisement revenue, Twitter marketing and sales of products, traffic generated by Twitter, or reduction in telecommunications operators' revenue.

  • World Bank on Tuesday raised Nigeria's GDP growth outlook from the 1.1 % forecast made in January to 1.8 %. The bank made this known in its June 2021 Global Economic Prospects report released. The bank's optimism stems from higher global oil prices, structural oil sector reforms, and market-based flexible exchange rate management. The Multilateral organization also pegged global economy growth at 5.6 % in 2021.

  • According to the 'Foreign trade statistics, Q1,2021', released by NBS earlier in the week value of trade increased Q-o-Q by+6.99 % from N 9.07tn to N9.76tn while total trade increased Y-o-Y by +14.13 % from N8.38trn to N9.76trn. The export element of total trade stood at N2.91tn, representing 29.79 % of the total trade while imports were valued at N6.85tn representing 70.21 % of total trade.

By implication, imports exceeded exports and created a trade deficit (in goods) of N3.94tn.  The proportion of imports in total trade rose by +15.61 % in Q1, 2021 compared to Q4,2020 and +54.30 % compared to Q1,2020.

 

  • Nigeria is set to export energy to Four West African countries namely: Niger, Togo, Benin, and Burkina Faso. The four countries would be collaborating to buy the power generated but not transmitted within Nigeria, the Chairman of the Executive Board of the West African Power Pool, Sule Abdulaziz made this known on Wednesday.

 

  • CBN   increased import duty on cargoes imported into the country by N23 after raising the custom exchange rate (which is the official rate for cargo clearance) from N381 to N404.97 per dollar. Analysts are concerned about the inflationary effects that the increase could amount to.

 

  • Nigeria and Netherland have agreed to collaborate on increase bilateral trade as well as partnerships in dairy development, export promotion, process, and capacity research, and knowledge exchange. The Dutch Amade this known at the Annual ambassador to Nigeria Bilateral Working Group (BWG) Meeting on Trade and Investment on Tuesday in Abuja. 


Proshare Nigeria Pvt. Ltd.

Global Economy

  • US Government sanctions the stoppage of supplemental unemployment benefits by September. This comes against the backdrop of the 559,000 new jobs created in May. Although the government had expected the stimulus package to create as much as 650,000 jobs, economists consider this enough a sign of recovery.
  • US Treasury secretary Janet Yellen supports the views of Federal Reserve Chairman, Jerome Powell, as both hinted of higher interest rates. The treasury secretary stated earlier in the week that a slightly higher interest rate environment would be a plus for society as well as from the Fed's perspective.
  • Leaders of G7 nations have reached a Global Tax Deal Aimed at Ending Profit Shifting. The countries agreed to back a new global minimum tax rate that mandates companies to pay a minimum tax of 15% regardless of where they are headquartered.
  • According to Eurostat data released on Tuesday, the Eurozone economic decline has turned out to be less than expected. Eurozone GDP fell in Q1 due to a sharp decline in consumer spending. The decline was however less than initial estimates as seasonally-adjusted GDP decreased Q-o-Q by -0.3% whereas the preliminary estimate was a -0.6% contraction.
  • Eurostat also forecast that Eurozone GDP would expand in 2021 by just over 4.5%.
  • Meanwhile, employment data released on Tuesday reveals that employment fell Q-o-Q -0.3%   and   -1.8% year-on-year.
  • According to revised official data from statistical agency INSEE, France has suffered a double-dip recession. The French economy shrank by -0.1% in Q1 2021, contrary to an initial estimate of +0.4% growth, making it the second consecutive quarter of negative growth following a contraction of -1.5% in Q4 2020.
  • Due to a smaller fall in public and capital spending, Japan's revised GDP data released by Cabinet Office on Tuesday shows that growth figures are better than the preliminary reading. Both public and capital spending had declined less than initially estimated, canceling out the somewhat larger fall in private consumption. The annualized -3.9% contraction in Q1 2021, was not as bad as the preliminary reading of -5.1%. The latest reading, is less than economists' forecast of a -4.8% decline, albeit the first contraction in three quarters.
  • Russia's foreign trade turnover reached $253 bln in 2021 gaining +18% Y-o-Y as of May 2021. While there was a +12.2% increase in export and +25.8% rise in import. The head of the Federal Customs Service Vladimir Bulavin stated at the St. Petersburg International Economic Forum that the coronavirus crisis still slows down Russia's trade turnover. In 2020, the country's trade turnover declined by - 15%. Export slumped by up to -21% and import fell by -5.3%.
  • Despite the surge in COVID-19 cases in India, India's exports grew by +52.39 % to $7.71 billion during the first week of June, this has been attributed to an increase in shipments in sectors such as engineering and petroleum. According to the Ministry of Commerce, Imports also increased by +83% to $9.1 billion over the period June 1-7. The Imports of petroleum and crude oil rose by +135% to $1.09 billion in the period under review.
  • Amid the second wave, World Bank on Tuesday stated that it expects the Indian economy to grow at +8.3% in 2021 and +7.5 % in 2022, India's recovery to pre-pandemic levels is being restrained by the largest outbreak of the virus.  According to the World Bank, India's economy recorded a contraction contracted by -7.3 % in 2020.
  • According to the World Bank, economic activity will benefit from higher spending on infrastructure, rural development, and health, and an unprecedented recovery in services and manufacturing, it said.
  • Ghanaian Authorities stated on Wednesday, that consumer inflation has slowed to 7.5% from 8.5% in April. The Food-price index, which had held inflation above 10% last year, eased to 5.4 % in May from 6.5% in April. The slowdown in Food inflation, as well as a stable exchange rate, brought inflation to below 8.5% which the monetary policy committee had projected. 


Proshare Nigeria Pvt. Ltd.


Commodities Market

Weekly Review and Outlook

Energy

Domestic

  • Nigeria's oil and gas industry together with the industry regulator had its 4th Nigeria International Petroleum Summit (NIPS) in Abuja on the 6-10th June 2021 with the theme- From Crisis to Opportunities: New Approaches to the Future of Hydrocarbons.
  • The Minister of State for Petroleum Resources, Chief Timipre Sylva, disclosed on Monday during his opening address at NIPS that Nigeria will produce four million barrels of crude oil per day and grow its reserves to 40 billion barrels through the marginal oilfields. The President of the Senate, Ahmed Lawan, on Monday also promised that the National Assembly will pass the Petroleum Industry Bill before the end of June.
  • Also at the summit, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote said there is a renewed effort by members of the African Petroleum Producers Association (APPO) to develop regional oil and gas investments fund and renegotiate the COP-21 Climate Change Agreement. International Oil Companies (IOCs) operating in Nigeria also urged the National Assembly not to relent in its effort to pass the Petroleum Industry Bill before the end of this month.
  • The Department of Petroleum Resources (DPR) during its session at the summit said Nigeria has recorded an increase in its proven natural gas reserves to 206.53 trillion cubic feet (tcf) as of January 1st, 2021 up from 203.16tcf in January 2020.

 

 Proshare Nigeria Pvt. Ltd.


Foreign

  • Oil price, on Monday, dipped as investors anticipated the outcome of the week's talks between Iran and world powers on a nuclear deal that is expected to boost crude supplies.
  • OPEC's secretary-general, Mohammad Barkindo, speaking in a virtual appearance at the Nigeria International Petroleum Summit (NIPS) on Monday, noted that efforts by the producers to support the market are succeeding as oil inventories fell in developed nations by 6.9 million barrels in April and it is expected to fall further in the coming months.
  • A U.S. investment bank, Goldman Sachs, on Thursday, projected that Brent crude prices could reach $80 per barrel this summer, betting on the recent oil market rally which may continue as vaccination rollouts boost global economic activity and demand for the commodity.
  • The International Energy Agency, on Friday, noted that the world would need a lot more oil from OPEC+ as global demand is on track to return to pre-pandemic levels at the end of 2022.
  • Oil prices rose on Friday to fresh multi-year highs heading for their third weekly jump on expectations of a recovery in fuel demand in the United States, Europe, and China as rising vaccination rates lead to an easing of pandemic curbs.
  • Brent had a weekly growth of 1.12% (see Table 1).


Metals

 Gold eased by -0.22% while Silver grew by 1.40% W-o-W (see Table 1).



Agriculture

  • Cocoa prices slid by -2.16% this week.
  • Corn prices dived by -10.9% W-o-W while Sugar depreciated by -1.29% (see Table 1).

 

Table 1Weekly Change in Commodity Prices

Commodity

11-Jun-21

04-Jun-21

31-Dec-20

Weekly Chg

YTD Chg

Brent

72.42

71.62

51.8

1.12%

39.81%

Gold

1886.5

1890.71

1898.67

-0.22%

-0.64%

Silver

28.17

27.78

26.4011

1.40%

6.70%

Cocoa

2403

2456

2597

-2.16%

-7.47%

Corn

603

676.75

484

-10.90%

24.59%

Sugar

17.56

17.79

15.28

-1.29%

14.92%

Source: Bloomberg, Proshare Research

*Data for 11th June 2021 is as of 1:46 pm (Nigerian Time)

 

Outlook

  •  In the coming week, oil prices are expected to rise on expectations of a recovery in fuel demand in the United States, Europe, and China as rising vaccination rates lead to an easing of pandemic curbs
  • Gold prices are expected to be mixed in the coming week, pressured by the dollar and bond yields.
  • Cocoa prices to decline next week on weak global demand.
  • Sugar prices are expected to be bullish next week amid soaring ethanol prices and concerns over top producer Brazil's drought-hit sugar cane crop.
  • Corn prices are expected to be bullish next week amid severe drought and bad weather in Brazil and the United States.


Proshare Nigeria Pvt. Ltd.

Fixed Income and Money Market 

 

Currency Market

The currency market continued its bearish trend this week at the BDC window majorly driven by panic buyers, although the Naira rebounded marginally against the dollar towards the end of the week, however not to the previous week's value.

 

It depreciated against the US dollar, British Pound, and Euro by +0.65% +1.84%, +0.50% respectively closing at $/N498, £/N718, and €/N608 at the BDC window. 

 

At the I & E FX window, the Naira depreciated marginally week-on-week by +0.01% and appreciated +0.02% at the NAFEX window.

 

The Naira closed the week at $/N410.80 at the I&E FX window, at the NAFEX (spot market) it closed at $/N409.92.

 

 

 

04-June-21

11-June-21

% Change

I & E FX Window ($/N)

410.75

410.80

+0.01%

NAFEX ($/N)

410

409.92

-0.02%

BDC ($/N)

495

498

+0.65%

Source: FMDQ, AbokiFX, Proshare Research

 

Money Market

Financial system liquidity opened the week at N117.62 billion, consequently pushing funding rates lower at the start of the week.

 

At the close of the trading session this week, funding rates rose significantly. Open Buyback (OBB) closed at 22.33% while Overnight (O/N) rates closed at 22.93% indicating a Week-on-Week (W-o-W) increase of +48.87% for OBB and +50.36% for O/N rates.

 

Money Market Rate

 

04-June-21

11-June-21

% Change

OBB (%)

15.00

22.33

+48.87%

O/N (%)

15.25

22.93

+50.36%

Source: FMDQ, Proshare Research


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


Treasury Bills Market

The Treasury bills market remained quiet at the start of the weeks' trading session and remained so for most of the trading session this week, however, the market ended on a bearish note.

 

At the close of the week, the average benchmark yield for T-bills was rose by +1.59% to close at 6.36% while OMO bills fell by -3.20% W-o-W to close at 9.64%, CBN's Special Bill rose by +5.78%.

 

Average Benchmark Yields

04-June-21

11-June-21

% Change

T. Bills (%)

6.26

6.36

+1.59%

OMO Bills (%)

9.96

9.64

-3.20%

SPEB

9.17

9.7

+5.78%

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 CBN sold N179.25 billion worth of notes against N91.27 billion offered at its NTB auction this week. The offer was over-subscribed. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, & 9.64% respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper fell slightly by 1bps.



 Proshare Nigeria Pvt. Ltd.



FGN Bond Market

The bullish momentum in the Bond market eased at the start of the week as offers improved slightly across the board particularly on the mid to long end of the curve which was maintained throughout the week.

 

At the close of the week, the overall market was bearish with selling interest seen at the short and long end of the curve.

 

The overall average benchmark yields closed at 9.78% for the week which rose W-o-W by +0.38%.

 

Average Benchmark Yields

04-June-21

11`-June-21

% Change

Short Tenor (%)

7.42

7.49

+1.00%

Mid Tenor (%)

11.46

11.41

-0.46%

Long Tenor (%)

13.29

13.36

+0.55%

Source: FMDQ, Proshare Research 


Ecobank Transnational Incorporated ("ETI") is seeking to raise US$300 Million from the international debt capital markets through the issuance of Tier 2 qualifying Sustainability Notes under the United States Securities and Exchange Commission Rule 144A and Regulation S (the "Notes").

 

FGN Eurobond Market

The Eurobond market started the week on a relatively quiet note as a deal by the world’s richest nations on global minimum corporate tax overshadowed bets on a full economic reopening.

 

The average benchmark yield closed at 5.91% at the end of the week rising marginally W-o-W by +1.55%.

 

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



Proshare Nigeria Pvt. Ltd.



Nigerian Capital Market

  • The Nigerian bourse closed the week on a positive note with a growth of +1.11%. The Nigerian Stock Exchange gained N224.24bn thus, year-to-date return moderated to -2.77%, while the market capitalisation settled at N20.41 trillion
  • The volume and value of stocks traded on the exchange this week grew by +45.22% and +122.84% respectively.
  • Sectoral performance across sectors tracked was significantly bullish this week as the NSE-IND was the highest gainer for the week with +2.36% while NSE Insurance recorded the highest decline with -4.12%. NSE Oil and Gas, NSE-30, NSE Consumer Goods and, NSE Banking closed the week positive with +1.37%, +1.36%,+1.06% and +0.89% respectively.
  • Market breadth for the week closed negative with 35 gainers led by CUTIX and OKOMUOIL as against 36 losers led by CWG and FTNCOCOA


 Proshare Nigeria Pvt. Ltd.



Chart 1: Movement of NSEASI Index Points 04 June. 2021- 11 June. 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 746.19 points and N530.40bn with a decline of -3.50% and -3.50% respectively.

 

 Proshare Nigeria Pvt. Ltd.



Dangote and Toni Index  

Dangote Index closed the week positive with 121.67 basis points from 116.36 basis points recorded the previous week, representing a growth of +4.56%.


DANGCEM, DANGSUGAR  and NASCON grew by +4.55%, +4.41% and +7.41% WoW respectively. NASCON recorded the highest loss W-o-W.

 

 

Table 2: Dangote Index W-o-W Change

 Proshare Nigeria Pvt. Ltd.



Furthermore, the Toni Index closed positive with 91.63 basis points from 91.23 basis points recorded the previous week, a W-o-W growth of +0.44%.


AFRIPRUD and TRANSCORP  closed the week positive with +6.78% and +2.27% respectively while UBCAP closed negative with -0.16%. TRANSCOHOT and UBA closed flat W-o-W.


 

Table 3: Toni Index W-o-W Change

Proshare Nigeria Pvt. Ltd.


 

Outlook

 

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.



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.

Previous Week(s) Market Outlook

1.      What To Expect From The Markets This Week - 070621

2.     What To Expect From The Markets This Week - 240521

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

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

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


Proshare Nigeria Pvt. Ltd.


Latest Reports This Past Week

1.      Active Voice Subscribers Declined by -5.96% QoQ in Q1 2021 - NBS

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

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

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

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

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

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

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

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

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


Proshare Nigeria Pvt. Ltd.



Related News

1.      Investors Gain N20.41bn as NSEASI Inches Up by 0.10% Amid Negative Market Turnover

2.     Investors Gain N150.76bn as NSEASI Inches Up Further by 0.74%, Closes Above 39,000bpts

3.     Investors Gain N101.79bn as NSEASI Inches Up by 0.50%, Erases Previous Day Loss

4.     Investors Lose N20.69bn 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