What To Expect From The Markets This Week - 161120


Saturday, November 14, 2020 08:00 AM / Proshare Content / Header Image Credit: EcoGraphics

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Nigeria: Economic Dashboard @ 131120    

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Editor's Note

Source: Proshare Research - November 14, 2020

Nigeria Economy

  • The Federal Government on 11th November ratified Nigeria's membership of the African Continental Free Trade Area. The main objective of the AfCFTA is to create a single continental market for goods and services, with free movement of businesspersons and investments, and thus pave the way 0of accelerating the establishment of the Customs Union.
  • The CBN in its third-quarter credit conditions survey report noted that defaults in unsecured loans to household and small businesses during the third quarter worsened and it is expected to continue in the fourth quarter of the year.
  • The Federal Government commenced the disbursement of its Micro, Small and Medium Enterprises Survival Fund to artisans in Lagos state.  The fund was created to cushion the effect of the COVID-19 pandemic on small businesses in the country, reaffirming the Federal Government's commitment to supporting MSMEs.
  • The Federal Government is in the process of accessing a $750m world bank loan for states. The Minister of Finance said the facility would boost the local economy in the various states and support vulnerable household's consumption.


Nigerian inflation figures would be released next week, both headline and food inflation are expected to rise. Furthermore, headline inflation is expected to reach 14% for October, the highest in 31-months. The disruption in the supply chain, logistic challenges and lockdown resulting from the EndSARS protest would fuel the rise in food and headline inflation. 


Global Economy

  • South Africa's unemployment rate rose to 30.8% between July and September, the highest level since 2008. There were significant movements in the South African labour market which resulted in a significant increase of 7.5 percentage points in the unemployment rate to 30.8%.
  • The U.S. government started fiscal 2021 with an October budget deficit of $284bn, a record for the month, as coronavirus related outlays spiked sharply from a year earlier and revenues declined. The October deficit was 111% higher than the October 2019 deficit of $134bn and 61% higher than the previous October record of $176bn in 2009, during the financial crisis and recession. This follows a record full-year deficit of $3.132trn for fiscal 2020, which ended Sept. 30, more than tripling the previous year's shortfall due to COVID-19 aid spending.  Before the COVID-19 pandemic, the United States was on track for a $1trn deficit in fiscal 2021 because Republican-passed tax cuts in 2017 had reduced revenues.
  • The U.K economy grew by 15.5% in the third quarter of 2021. This comes after an unprecedented 19.8% plunge in the previous quarter as nationwide lockdown measures crippled activity. The third-quarter growth marks U.K's sharpest quarterly expansion since records began in 1955, but GDP is still 9.7% below where it was at the end of 2019. It is forecasted that there will be a modest fall in GDP during October, reflecting the introduction of “tiered restrictions” in England and a local lockdown in Wales. The decline will be amplified in November, as there would likely be a 6-7% slide in monthly GDP on the month-long English lockdown which would likely result in a negative number for Q4.
  • The number of Americans filing new claims for unemployment benefits to a seven-month low last week, but the pace of decline has slowed and further improvement could be limited by a ranging Covid-19 pandemic and lack of additional fiscal stimulus. There are not enough jobs and not enough inflation to assuage the worries of Fed officials trying to go it alone to engineer the economic recovery. The Labour Department said its consumer price index was unchanged last month following a 0.2% increase in September. A 0.2% rebound in food prices was offset by a 0.5% drop in the cost of gasoline.
  • China exports grew at the fastest pace in 19 months in October, while imports also rose. Exports in October rose 11.4% from a year earlier, beating analysts' expectations of a 9.3% increase and quickening from a solid 9.9% increase in September. The surge in exports pushed the trade surplus for October up to $58.44bn and a $37bn surplus in September. China's exports have stayed largely resilient amid the COVID-19 global pandemic, as strong demand for medical supplies, and reduced manufacturing capacity elsewhere worked in China's favour.

China's factory-gate prices fell at a sharper-than-expected pace in October, weighed by soft demand for fuel even as the trade and manufacturing sectors staged impressive recoveries from their COVID-19 slump. The producer price index (PPI) fell 2.1% from a year earlier, the same pace as in September. China's consumer price index rose 0.5% from a year earlier, the slowest since October 2009.




There is a mix of uncertainty and hope as regards the outlook of the global economy. The announcement by Pfizer that its vaccine was more than 90% effective in preventing COVID-19 pandemic provided a fresh breath of hope for the quick recovery of the global economy. On the other hand, the rising number of coronavirus cases in the US, UK, Germany and France, renewed lockdowns poses risk for a quick rebound of the global economy.  


Fixed Income and Money Market 


Money Market

Funding rates for this week were low with overnight (O/N) rates closing the week at 0.63% and open buyback (OBB) closing at 0.50, this indicates robust 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

Activity in the Nigerian Treasury Bill (NTB) started the week on a quiet note because of system liquidity, however, the market closed the week on a bullish note, with huge participation for near to maturity instruments as average yields across instruments fell by 16bps on Friday 13 November 2020.


The PMA result, which was held on Wednesday 11 November 2020, was relatively strong with stop rates printing at 0.04%, 0.15%, and 0.30% on the 91-Day, 182-Day, and 364-day maturities, respectively.


We expect participation in the NTB market to trend downwards in the coming week because of the depressed yields.


FGN Bond Market

The bond market started the week on a bearish note because of the CRR debit and FX auction which took place last week Friday. Through the week demand for these instruments waned further as local PFAs were asked to realign their portfolios with the 4-month deadline as directed by the PENCOM circular.


Auction results for the November savings bonds showed a decline in the amount allotted and the total number of subscriptions, for the 2-year instrument, the total amount of successful subscription declined from 34 in October to 17 in November while for the 3-year instrument total amount of subscription declined from 80 to 77.


The market closed the week on a bullish note as average yields on all instrument decline by 5bps with huge participation for the short and mid-end of the curve. The bullish trend is expected to continue as local managers continue to seek out investment outlets.


FGN Eurobond Market

The FGN Eurobond market started the week on a bullish tone as news of Pfizer Vaccine which prevents 90% of COVID-19 infections boosted the demand for risk assets and increased participation in Nigeria's Eurobond market. Investor sentiment for the market closed mixed with participation more on the long end of the curve.


We expect the market to continue to trade on events around the global oil price and demand.


Foreign Exchange

At the start of the week, the Naira appreciated against the US Dollar by 9bps to $1/N385.67 at the investors and exporters window (I&E), at the Bureau de change (BDC) the Naira was sold against the US Dollar, British Pound, and Euro at $1/462, 1£/N602, and €1/N540, respectively.

However, the week closed with Naira depreciating against major currencies in the BDC market, the Naira depreciated against the US dollar by N1, against the Pound and Euro the Naira was flat. At the I&E window, the Naira appreciated by 0.10% to $1/386.50.


We expect the CBN to continue its FX management strategy in supporting the Naira at the official and I & E window. 

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Commodities Market


Weekly Review and Outlook



The oil market ended the week on a positive note as hopes for a vaccine kept the market on track for a consecutive weekly gain. As of 4:10 pm (Nigerian time), Brent Crude had risen by +7.5% WoW (Week-on-Week) to $43 per barrel. While the news of the vaccine helped support prices this week, the rise in the US crude stockpiles and the new coronavirus infections in the United States and some parts of Europe are at record levels and renewed restrictions and lockdowns to contain the spread have deadened the prospect of a near-term global oil demand recovery.


Moreover, the International Energy Agency (IEA), said on Thursday that the global oil demand is unlikely to get a major boost from any roll-out of COVID-19 vaccines until well into 2021.



Gold prices recorded a weekly loss of about -2.9% as investors dumped the safe-haven bullion and flocked towards the riskier assets as the vaccine news revived the risk appetites of investors. Silver also dropped by -2.8% W-o-W (see Table 1).


Soft Commodities

Cocoa prices had a weekly gain of +1.6% as the political tension in Ivory Coast, a top producer of cocoa, persists. The prices of cocoa this week has been quite stable given the supply disruptions caused by the turmoil in the West African country.


Corn prices moved up by +2.64% WoW while Sugar also inched up by +3.52%. (See Table 1)


Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: Bloomberg, Proshare Research

*Data for 13th Nov 2020 is as of 4:10 pm (Nigerian Time)



  • In the coming week, oil prices could experience more losses than gains as the positive sentiment sent to the market by the vaccine news is set to wear off. The rise in Coronavirus cases and US Crude Stockpiles are other factors that are likely to weigh down the oil prices as lockdowns and restrictions to contain the virus continues.
  • Gold prices should be stable in the coming week, as the vaccine news keeps it depressed while the surge in coronavirus cases pushes investors towards the safe-haven asset.
  • We expect cocoa prices to be mixed in the coming week as supply challenges persist on lingering political tensions in Ivory Coast.
  • Sugar prices to be bullish as Indian's export is on hold because its export policy for the season has yet to be announced.
  • Corn prices to rise amid strong US corn exports to China and other countries.

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Nigerian Capital Market

  • The Nigerian bourse closed the week positive as it gained N2.10trn while NSE All-Share Index inched Up by +12.97% YTD return and market capitalization stood at +30.53% and N18.3trn, respectively.
  • Stocks rose significantly during the week as a result of an increased rally on the exchange due to portfolio rebalancing linked to depressed interest rates in the fixed income market, investors took a flight to the capital market. On Thursday, the NSEASI rose beyond the set threshold of 5% from 33,268.36 to 34,959.39 thereby triggering the circuit breaker protocol on the exchange for 30 minutes for the first time since the Circuit Breaker was introduced in 2016.
  • A total turnover of 4.509bn shares worth N58.73bn in 47,140 deals was traded this week by investors on the floor of the Exchange while volume and value traded advanced by +121.4%, and +162.4%, respectively. The most traded stocks by volume were ZENITH BANK (523.8m units), FBNH (499.8m units) and TRANSCORP (402.6m units).
  • Sectoral performance for the week was bullish as all indices closed the week positive except the ASeM index which closed flat. NSE Banking, NSE Insurance, NSE Consumer Goods, NSE-IND closed positive by +14.37%, +7.67%, +11.35% and +16.97% respectively.
  • Market breadth closed positive for the week with 69 gainers led by OANDO and JAPAUL as against 12 losers led by IKEJA HOTEL and GSPECPLC.


Chart 1: Movement of NSEASI Index Points 9Nov. 2020 - 13Nov. 2020

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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 positive movement in Market capitalization and NSI. The NSI and Market capitalization closed the week at 726.04points and N533.33bn respectively, an increase of +0.94% WoW.



Dangote and Toni Index 


Dangote Index closed the week positive at 108.51 basis points from 93.61 basis points recorded the previous week, an increase of +15.92%. DANGCEM, DANGSUGAR and NASCON recorded growth in their share prices.


Table 2: Dangote Index W-o-W Change




WoW Chg













Source: NSE, Proshare Research 


In the same vein, the Toni Index also closed positive to close at 111.18 basis points from 97.59 basis points recorded the previous week, a W-o-W increase of +13.93%. The stocks making up the index all recorded growth in their share price. 


Table 3: Toni Index W-o-W Change




WoW Chg





















Source: NSE, Proshare Research 



In the coming week, we expect that there will be some profit-taking in the market. Furthermore, the excess liquidity in the domestic money market, low yields in the fixed income market and bottlenecks in translating returns on domestic investment into the foreign exchange will put pressure on the Nigerian Stock Exchange. 

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