Saturday, December 12, 2020 08:00 AM / Proshare Content / Header Image Credit: EcoGraphics
Nigeria: Economic Dashboard @111220
Source: Proshare Research - December 12, 2020
trade deficit rose by +32.45% from N1.8trn
as of the end of the second quarter to N2.38trn in the third quarter. The value
of Nigeria's merchandise trade stood at N8.37trn in Q3 2020. This represents an
increase of +34.15% in Q3 2020 compared to
Q2 2020 but a decline of -8.85% compared to Q3
2019. Total trade year-to-date amounted to N23.2trn. The import component was
valued at N5.38trn, representing an increase of +33.7%
in Q3 2020 against the level recorded in Q2 2020 and +38.02% compared to Q3 2019.
- On the
other hand, the export component accounted for N2.99trn of the total trade in
Q3 2020 indicating an increase of +34.85% compared
to the value recorded in Q2 2020 but a decline of -43.41%
compared to Q3 2019. The value of exports in Q3 2020 represented the
lowest level of any quarter since 2017.
- The Lagos-Ibadan
rail line commenced commercial operations on Monday, December 7th,
2020. The train fare ranges between N2,500 and N6,000.
Federal Government halted the sack of 300 employees of Arik Airline and noted
that the hike in domestic airfares was inevitable given the negative effect of
the COVID-19 pandemic on the airline industry.
Nigeria's inflation figures will
be released next week by NBS. We expect headline, core, and food inflation rate
to maintain an upward trend. The magnitude of increase in headline inflation would
be less than +0.52% percentage points
recorded in November 2020. Headline inflation could rise to 14.52%.
- The UK
economy in October recorded a sixth consecutive month of growth, following the
economy contraction by -19.5% in April. The UK
economy grew slowly by +0.4% in October
amidst tougher coronavirus restrictions. Despite continuous growth, the UK
economy remains around 8% below its pre-pandemic peak. Sectors such as
accommodation and food were the worst affected while areas of the economy such
as education, retail, and car manufacturing grew strongly in October.
tensions between China and Australia lingers on as China announced that it will
temporarily impose anti-subsidy fees on some Australian wine imports from Dec.
11. Importers of wines being investigated for Australian subsidy benefits will have
to pay deposits to China's customs authority.
- Asides from
the anti-dumping tariffs of 107.1% to 212.1% on wine imported from Australia,
exporters of wine to China being investigated would have to pay anti-subsidy
deposits of 6.3%. Some of Australia's wine importers that would be affected
include Australia's Treasury Wine Estates, as well as Casella Wines and Swan
Vintage while Pernod Ricard will attract a rate of 6.4%.
and UK signed a free trade deal that will cover a trade relationship worth more
than $22bn. The agreement is very similar to an existing deal between Singapore
and the European Union (EU). The agreement removes tariffs and gives both
countries access to each other's markets in services. It also cut non-tariff
barriers for electronics. Duties will be eliminated by November 2024, the same
timeline as the pact between the EU and Singapore.
consumer price index (CPI) fell 0.5% in November from a year earlier after
rising 0.5% in October. This was driven mainly by improvements in the pork
supply. On the other hand, the producer price index (PPI) fell 1.5% from a year
trade negotiation still deadlocked despite the dinner meeting between British
Prime Minister Boris Johnson and European Commission President Ursula von der
Leyen on Wednesday, as neither EU nor UK is yet to reach common ground, as both
sides are unwilling to compromise.
- The South
African economy grew by +13.5% (Q-o-Q) and
contracted by -6.0%(Y-o-Y). The strongest
contribution came from manufacturing which contributed 16.2 percentage points
while it rose by +210.2%. Trade contributed
14.6 percentage points while it grew by +137%. The highest
growth was recorded in mining at +288.3% but its contribution was less than
that of manufacturing and trade because the contribution of mining was only
11.8 percentage points.
Weekly Review and Outlook
prices dipped by over 1% on Monday, erasing the positive sentiment that the
market boasted last week after OPEC plus agreed on a plan for January
American Petroleum Institute (API) reported on Tuesday a build in crude oil
inventories of 1.141 million barrels for the week ending December 4.
- Brent crude oil price rose above $50 per barrel (bbl) on Thursday for the first time since oil
price slumped in early March, as hopes of a faster demand recovery after the
release of COVID-19 vaccines underpinned a huge rise in U.S. crude inventories
that showed there was still bulk supply available. Brent had
a weekly growth of +2.34% (see Table 1).
- Gold prices inched up by +0.14%,
extending their gains from the previous week. Silver depreciated by -0.79% W-o-W (see Table 1).
prices depreciated by -0.95% this week, making
it two weeks of successive losses.
prices plunged by -0.77% W-o-W while Sugar also
depreciated by -1.03% (see Table 1).
Table 1: Weekly Change in Commodity Prices
Source: Bloomberg, Proshare Research
*Data for 11th Dec 2020 is as of 2:06 pm (Nigerian
- In the
coming week, Oil prices are expected to be bullish as U.S. FDA is set to
approve the Pfizer-BioNTech COVID-19 vaccine for
prices are expected to continue their downward trend as the vaccine roll ou
- We expect
cocoa prices to experience an uptick in the coming week as the truce between
top grower Ivory Coast and Chocolate maker Hershey is expected to lead to a pick-up
in producer selling.
prices to rise as Indonesia, one of the world's largest sugar consumers is set
to announce its import license.
prices to rise during the coming week, amid robust demand and dry weather in
South American crop areas and U.S. Midwestern area.
Fixed Income and Money Market
market rates started the week low and continued through the week as a result of
system liquidity this was supported by N280.0bn OMO maturity repayment. The
overnight (O/N) rates closed at 0.88% while
the open buyback (OBB) closed the week at 0.50%.
We expect rates to trend lower in
the coming week in the absence of funding obligations and any other liquidity
Nigerian Treasury Bills (NTB) market started the week on a quiet note, however,
on Wednesday, we saw a huge sell-off of NTB across all tenors. The CBN
conducted an auction on Wednesday offering N50.9bn worth of notes, the offer
was oversubscribed all tenors with investor demand strongest on the 91-day
tenor paper which was oversubscribed by over 10 times. The rate for the 91-day
tenor was 0.01% while 182-day and 364-day
notes were 0.09% and 0.15% respectively. The NTB average yield closed the week at 0.43%.
week the CBN also conducted a Special bill auction, it sold an 81-day bill at
o.5% discount rate to the banks, and the size of issuance is estimated at
participation in the NTB market to remain quiet in the coming week as a result
of the depressed and unattractive yields.
market started the week on a bearish note as investor sentiment was mixed as a
result of the uncertainties of CBN's Special Bill, however, the uncertainty was
eased after CBN auctioned the Special bill at 0.5%.
Average benchmark yields for the FGN bonds closed the week at 2.08% with a huge sell-off at the long end of the
set to undertake a Commercial Paper Issuance under its N100bn CP program, the
CP has a tenor of 260 days intending to raise about N30bn to support the Bank's
short-term funding needs.
the market to continue in a quiet trend in the coming week.
FGN Eurobond Market
The FGN Eurobond market started
the week on a bearish note in reaction to falling oil prices as Iran signaled
oil production to full capacity in 2021 and rising COVID-19 cases. However, in
the week we saw a reversal in the market as investor sentiment was positive and
yields fell in most of the sessions this week.
We expect the market participants to continue to react to events
around the global oil price and COVID-19 news.
Foreign Exchange Market
For weak-on-week (W-on-W)
performance of the Naira, at the I&E FX window, the Naira appreciated
against the USD by +0.25%, at the BDC market
it remained unchanged.
The Naira closed the week at
$/N395 at the I&E FX window, at the NAFEX (spot market) it closed at
$/N391.71, and at the BDC market, it closed at $/N480, E/N630, and E/N580.
We expect the CBN to continue its
FX management strategy in supporting the Naira at the parallel and I & E
Nigerian Capital Market
- It was a bearish performance on the Nigerian Bourse this week as a
result of profit-taking as
reflected in the NSEASI which dipped by -2.53%. The week opened negative on
increased risk-off sentiment and
remained so through the week with profit-taking on tier-1 banks
and large-cap stocks. Market cap
retreated by N463.73bn; YTD return and market capitalization retreated to +27.60% and N17.90trn,
- A total turnover of 2.32bn shares worth N20.99bn in 23,722 deals
was traded this week by investors on the floor of the
the volume and value of stocks traded advanced by +171.82% and +4.20% respectively. The
most traded stocks by volume were JAIZBANK, UBA, and ZENITHBANK accounting for 894m shares worth N7.07bn in 4,045 deals,
and 33.72% to the total equity turnover volume and value
- Performance across sectors was negative for the week as all indices
closed the week negative except the NSE-ASeM which closed flat. NSE-IND
recorded the highest decline of -4.96%, Banking, NSE Consumer Goods, NSE Insurance, and NSE Oil & Gas
retreated by -2.93%, -1.55%, -1.82%, and -0.25% respectively.
- Market breadth was negative for the week with 13 gainers led by FTNCOCOA and UNIONDAC as against 46 losers led by REGALINS and UPL.
Chart 1: Movement of NSEASI Index
Points 07Dec. 2020 - 11Dec. 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 733.77
points and N545.41bn showing an increase of +1.98% and +1.98%WoW
Dangote and Toni Index
Dangote Index closed the week negative at 98.42
basis points from 106.82 basis points recorded the previous week, a decline of -7.86%. DANGSUGAR and DANGCEM recorded a decline in their share prices
except for NASCON which closed flat. DANGCEM recorded the highest loss of -8.04% WoW.
Table 2: Dangote Index W-o-W Change
Furthermore, the Toni Index also closed
negative to close at 96.09 basis points from 99.45 basis points recorded the
previous week, a W-o-W decline of -3.38%. All the stocks weighed under the Toni Index closed the
week negative with TRANSCOHOT recording the
highest loss of -10.00%.
Table 3: Toni Index W-o-W Change
continuous profit-taking in the equities market albeit alongside bargain hunting as yields in the fixed income market remains relatively
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