Saturday, December 19, 2020 08:00 AM / Proshare Content / Header Image Credit: EcoGraphics
Nigeria: Economic Dashboard @ 181220
Source: Proshare Research - December 19, 2020
- According to the National Bureau
of Statistics, non-performing loans in the Nigerian banking sector declined by
N42.4bn in three months. The total amount of non-performing loans in Nigerian
banks declined from N1.21trn at the end of the second quarter of 2020 to
N1.17trn as of Q3 2020. A breakdown of total credit by geographical
distribution reveals that Lagos state beneficiaries recorded the highest credit
by geographical distribution while Yobe beneficiaries received the least from a
total loan of N19.46trn as of the end of Q3 2020.
- Nigeria's capital importation as
of Q3 2020 stood at $1.46bn, increasing by +12.86% from Q2
2020 and it declined by -74.03% compared to Q3
2019. The largest amount of capital importation by type was received through other
investments and it accounted for 43.75% of total capital importation, while
Foreign Direct Investment and Portfolio investment accounted for 28.38% and
27.87% of total capital importation respectively in Q3 2020.
- Furthermore, Lagos State was the top
destination of capital investment in Nigeria in Q3 2020 with $1.21bn, which
accounted for 82.71% of the capital inflow in Q2 2020.
- Nigeria's inflation rate surged
by 14.89% (Y-o-Y) in November 2020, which is 0.66% points higher than the rate
recorded in October 2020 (14.23%). While the food index rose sharply by 18.3%
in November 2020 compared to 17.38% in October 2020, representing 0.92% points
higher than the preceding month. The rise in the food index was caused by
increases in prices of Bread and cereals, potatoes, yam & other tubers,
meat, fish, fruits, vegetables, and oils & fats. Furthermore, core
inflation which excludes the prices of volatile agricultural produce stood at
11.05% in November 2020, declined by 0.09% when compared with 11.14% recorded
in October 2020. The highest increases were recorded in prices of passenger
transport by air, medical services, hospital services, repair of furniture,
passenger transport by road, maintenance and repair of personal transport
equipment, vehicle spare parts, hairdressing salons & personal grooming
establishments, pharmaceutical products, paramedical services, and motor cars.
- The Senate passed the Finance
Bill 2020. The bill seeks to amend 12 Acts which include the Capital Gains Tax
Act, Companies Income Tax Act (CITA), Personal Income Tax Act, Tertiary
Education Trust Fund (Establishment) Act, Customs & Excise Tariff, etc.
(Consolidated) Act, and the Value Added Tax. Others are the Federal Inland
Revenue Service (Establishment) Act, Nigeria Export Processing Zone Act, Oil
& Gas Export Free Zone Act, Fiscal Responsibility Act, Companies and Allied
Matters Act 2020, and the Public Procurement Act.
- The World Bank approved Nigeria's
request for a $1.5bn loan. The loan will focus on four areas of engagement
namely investing in human capital, promoting jobs and economic transformation
and diversification, enhancing resilience, and strengthening the foundations of
the public sector. The $1.5bn loans are meant for two projects in Nigeria. The
projects are Nigeria COVID-19 Action Recovery and Economic Stimulus - Program for
Results (Nigeria CARES) and the State Fiscal Sustainability Program for Results
(SFTAS) Additional Financing. Both projects will get a $750m facility through
the International Development Association.
- The Federation Accounts
Allocation Committee shared a total of N601.1bn November 2020 Federation
Account revenue to the federal, state & local governments and agencies. The
total distributable revenue of N601.1bn comprised statutory revenue of
N436.46bn, Value Added Tax revenue of N136.79bn, and augmentation of N7.86bn
from the forex equalization revenue.
industrial output grew in November, expanding for the eight-straight month as
the economic recovery gathered pace and global demand picked up. According to
NBS, industrial output growth quickened to +7.0% in
November from a year earlier. Retail sales rose +5%
(Y-o-Y), auto sales grew by +11.8%, sales
of household appliances grew by +5.1% in
November, communications equipment sales spiked up by +43.6%.
Fixed-asset investment rose +2.6% in
January-November from the same period last year, faster than a +1.8% increase in the
first 10 months of 2020. Private-sector fixed-asset investment, which accounts
for 60% of total investment, rose +0.2% in January-November, compared with a -0.7% decline in the first
10 months of the year.
exports declined in November by -4.2%, largely
due to weaker U.S and China-bound shipments and suggesting a slower pace of
recovery. Japan's exports failed to match the strong recoveries seen in major
Asian manufacturing rivals China and South Korea, which have benefited from the
spike in the global demand for technology that enables remote working during
unemployment rate rose to 4.9% in Q3 2020 and 5.2% in October alone. Over
800,000 jobs have been lost from payrolls since the pandemic began.
- The Australian unemployment rate declined in November, a sign that
massive monetary and fiscal stimulus was bearing fruit after it brought the
coronavirus pandemic under the country. According to the Australian Bureau of
Statistics (ABS), employment numbers increased by 90,000 in November, and the
jobless rate eased to 6.8%. Australia's underutilization rate, which combines
the unemployment and underemployment rates stood at 16.2%.
- UK and US are in talks over a mini trade deal that could see
punitive tariffs on Scottish whisky lowered. This talk comes after the UK
recently announced that it would drop tariffs against the US over subsidies for
Prices slid more than 1% on Monday, as OPEC lowered its oil demand
forecast while production rises. OPEC now expects global oil demand to fall to
9.77m bpd in 2020 to reach 89.99m bpd this year, compared to over 90m bpd
projected for its November Monthly Oil Market Report. Signs of rising supply
also weighed on the market. Major European countries continued in lockdown mode
to curb the spread of COVID-19, which has reduced fuel demand.
Oil hit a nine-month high on Thursday after government data showed a
fall in U.S. crude stockpiles last week, while progress towards a U.S.
coronavirus relief package deal and strong Asian demand lifted prices.
Brent had a weekly growth of +3.7% (See
Gold prices inched up by +2.7%,
extending their gains from the previous week. Silver rose by +8.4% W-o-W. (See Table 1)
Cocoa prices depreciated by -3.5% this
week, making it the third week of successive losses.
Corn prices grew by +3.7% W-o-W while
Sugar also depreciated by -0.07%. (See
Table 1: Weekly
Change in Commodity Prices
Source: Bloomberg, Proshare Research
*Data for 18th Dec 2020 is
as of 4:41 pm (Nigerian Time)
- In the
coming week, Oil prices are expected to continue their upward trend as
countries around the world continue to approve the use of vaccines. U.S. fiscal stimulus deal is also expected to help
- Gold prices
are expected to rise in the upcoming week, as the fiscal stimulus deal seems
imminent, as the U.S. Fed pledged to keep interest rates low until an economic
recovery is secure.
- We expect
cocoa prices to be stable, with crop prospects improving in Ivory Coast and
further weakness in demand expected due to the COVID-19 pandemic.
- Sugar prices
to rise as Indian sugar exporters will try to quickly secure sales after the
government approved a subsidy program for up to 6m tonnes earlier this week.
- Corn prices
to rise during the coming week, as China continues to drive the boom in U.S.
corn sales and shipments.
Fixed Income and Money Market
most of the trading session this week, money market rates were low as the week
started with OMO bills repayment of N283bn. However, at the end of the week,
there was an uptick in the rate as the open buy back (OBB) and overnight (O/N) rates both closed the week
expect rates to stay at these levels for the coming week since the market
doesn't foresee any significant outflow and any other liquidity shocks that may
push rates up.
Nigerian Treasury Bills (NTB) market started the week on a quiet note, in the
week CBN auctioned an NTB offering N7bn worth of notes, the offer was
oversubscribed by 17.3 times, although, investor demand was strongest in the
364-day tenor bill was oversubscribed by 31 times. The 91-day note was allotted
at 0.05%, while 182-day and 364-day tenor were allotted 0.5% and 1.14%
respectively. The NTB average yield closed the week at 0.41%.
CBN conducted an OMO auction offering N60bn worth of notes, which was
oversubscribed by 6 times. However, investor demand was strongest on the
362-day tenor bill which was oversubscribed by 7.5 times. 91-day, 180-day, and
362-day were allotted 1.65%, 4.50%, and 6.44% respectively. The NTB average
yield closed the week at 0.47%.
expect participation in the NTB market to remain quiet in the coming week as a
result of the depressed and unattractive yields.
bond market started on a quiet note, this was as a result of a downward
adjustment in the bond auction circular which was N20bn lower than last month
of the re-opened 15 -year and 25-year tenor.
DMO conducted a bond auction offering N60bn worth of bonds, however, what was
allotted at the end of the auction was N30bn worth of bonds. Investor demand
was strongest on the 15-year tenor which was oversubscribed by 3 times. The
15-year and 25-year papers were allotted at 6.95% and 7.05% respectively.
FCMB commercial paper issuance has been suspended till further as announced by
the management of the Bank.
expect the market to continue in a quiet trend in the coming week.
FGN Eurobond market started the week on a quiet note as market participants
traded cautiously with the rising number of coronavirus infections despite
vaccine news remain positive.
We expect the market participants
to continue to react to events around the global oil price and COVID-19 news.
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 appreciated by +1.04%.
Naira closed the week at $/N394 at the I&E FX window, at the NAFEX (spot
market) it closed at $/N390.85, and at the BDC market, it closed at $/N475,
Â£/N630, and â‚¬/N577.
expect the CBN to continue its FX management strategy in supporting the Naira
at the parallel and I & E window.
Nigerian Capital Market
Nigerian Bourse continued its bullish performance this week and the Performance of the exchange was supported by interest in
tier 1 bankers and other bellwether stocks including the stocks in the
Industrials sector. NSEASI
advanced further by +7.46% to close above 35,000bpts while Market
cap also advanced by N1.33trn; YTD return and market capitalization currently
stand at +37.12% and N19.23trn,
- A total
turnover of 1.893 billion shares worth N17.647 billion in 20,660 deals was
traded this week by investors on the floor of the Exchange; the volume and
value of stocks traded declined by -46.44% and -2.99% respectively. The most traded stocks by volume were JAIZBANK, FBNH, and NIGERINS accounting for 761.87 shares worth N1.46bn in 1,395 deals,
contributing 40.25% and 8.32% to the total equity turnover volume and
across sectors was positive for the week as all indices closed the week advanced
except the NSE-ASeM and NSEGROWTH which closed flat. NSE Insurance was the
highest advancer for the week with an increase of +13.39%, Banking,
NSE Consumer Goods, NSE-IND, and NSE Oil
& Gas advanced by +5.12, +3.08,
+7.74%, and +1.34% respectively.
Chart 1: Movement of NSEASI Index Points 14Dec. 2020 - 18Dec. 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 722.82 points and N537.27bn showing a decline of -1.49% and -1.49% WoW respectively.
Dangote and Toni Index
Dangote Index closed
the week positive at 111.57 basis points from 98.42 basis points recorded the
previous week, an increase of +13.36%. DANGSUGAR and DANGCEM recorded a decline
in their share prices except for NASCON which closed
negative with a decline of -9.38%.
the highest gain of +14.48% WoW.
Table 2: Dangote Index W-o-W Change
Furthermore, the Toni
Index also closed negative to close at 99.93 basis points from 96.09 basis
points recorded the previous week, a W-o-W growth of +4.00%. All the
stocks weighted under the Toni Index closed the week positive but TRANSCOHOT closed flat WoW.
Table 3: Toni Index W-o-W
With limited opportunities for
high yields in other asset classes due to macroeconomic challenges and a high
inflation rate environment, we expect the market to sustain the bullish
momentum as investor sentiment and market breadth remained positive in the
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Previous Week(s) Market Outlook
1. What To Expect From The Markets This Week - 141220
2. What To Expect From The Markets This Week - 071220
What To Expect From The Markets This Week- 301120
4. What To Expect From The Markets This Week - 161120
5. What To Expect From The Markets This Week - 021120
Latest Reports This Past Week
Covid Related Reports
2. NBS Publishes COVID-19 Impact Monitoring Survey Report for
3. Average Air Fare Increases by 18.47% YoY in November
2020 - NBS
4. Capital Importation into Nigeria Stood At $1,461.49m
in Q3 2020 - NBS
5. Banking Sector Records 2.78bn Volume of Transaction
in Q3 2020 - NBS
6. FAAC Disburses N639.90bn in October 2020 - NBS
7. GDP by Expenditure: Household Consumption Expenditure
Contracts By -0.08% in Q2 2020 - NBS
1. Investors Gain N1.33trn WoW as NSEASI Inches Up by 7.46%
to Close the Week Positive
2. Investors Gain N390.18bn as NSEASI Inches Up by 2.10%,
Closes Above 36,000bpts
3. Investors Gains N140.03bn as NSEASI Inches Up by 0.76%,
Maintains Positive Market Sentiment
4. Investors Gains N199.48bn as NSEASI Inches Up Further by
1.10%, Closes Above 35,000bpts
5. Investors Gains N309.78bn as NSEASI Inches Up by 1.73% to
Open the Week Positive
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