What To Expect From The Markets This Week - 250121


Saturday, January 23, 2021 07:30 AM / Proshare Content / Header Image Credit: EcoGraphics


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Nigeria: Economic Dashboard @ 220121 

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Editor's Note

Source: Proshare Research - January 23, 2021

Nigeria Economy

  • According to data from NBS, Nigeria's debt servicing cost increased quarter-on-quarter (Q-o-Q) by +88.8% to N803.69bn in Q3 2020 from N425.7bn in Q2 2020. Furthermore, the debt service fee comprised of the actual external debt service fee of N199.5bn and the actual domestic debt service fee of N604.19bn.
  • The external debt service fee was used to service the country's foreign debt of N12.19trn in the quarter.  Also, there was a rise in external debt service fees by +77% (Q-o-Q). It rose to N199.5bn in Q3 2020 from N112.9bn in Q2 2020. On the other hand, the domestic debt service fee rose by +93% to N604.19bn in Q3 2020 from N312.8bn in Q2 2020 which was used to service domestic debt of N20.04trn in the quarter.
  • A total FAAC of N619.34bn was allocated for December 2020 to the three tiers of government. A breakdown of the allocation reveals that the Federal Government received N218.3bn, States received N178.28bn, Local Government councils received N131.79bn, while the oil-producing states received N31.83bn as a 13% derivation of mineral revenue. Furthermore, the value-added tax for the month increased to N171.36bn from N158.79bn the previous month.
  • Fitch Ratings in its report titled 'Nigeria's deficit monetization may raise macro-stability risks’ noted that sustained use of direct monetary financing could raise risks to macroeconomic stability, given the current weak institutional safeguards but expects the FGN to reduce the use of the facility in 2021. It further noted that the FGN directly borrowed 1.9% of GDP from the CBN to fund its fiscal deficit in 2020, estimated by Fitch at 3.6% of GDP.
  • According to data from the Nigerian Communications Commission, the number of active telephone subscribers across the country rose to 208m as of November 2020. Furthermore, it noted that telephone density stood at 108.92%, active subscriptions were 154.9m and broadband penetration stood at 45.07%.

Global Economy

  • The latest data from the Chinese NBS, reveals that its GDP grew by +2.3% in 2020. Also, its GDP grew by +6.5% in Q4 2020, an increase from a growth rate of +4.9% recorded in Q3 2020. China was the only major economy in the globe to record growth despite the adverse effect of the pandemic virus. The growth in its GDP was fanned by an impressive performance of its export sector while on the other hand, its consumption was lagged.  Its retail sales declined by -3.9% in 2020, the first contraction since 1968.
  • According to official data from the Singaporean economy, its December non-oil domestic exports (NODX) expanded by +6.8% Y-o-Y following a decline of -5.0% in November. The expansion was attributed to the rise in shipments of electronics as well as non-electronic such as specialized machinery and non-monetary gold.
  • The European Central Bank on Thursday left its key bond-purchase program unchanged. It noted that the governing council added 500bn euros ($608bn) to its pandemic emergency stimulus bond purchases, bringing the total to 1.85trn euros ($2.2trn), and extended the regular purchases through at least March 2022. Its forecast that the eurozone economy contracted by -7.8% in 2020 and projects a growth rate of +3.9% in 2021.
  • According to Ghana Statistical Service, its Y-o-Y inflation rate rose to 10.4% in December compared to 9.8% in November. Also, its month-on-month inflation between November and December 2020 was 0.9%. Food contributed 59.1% to the overall inflation, the highest contribution recorded since April 2020, when COVID-19 hit the Ghanaian economy.

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Commodities Market

Weekly Review and Outlook


  • The week started on a positive note in Nigeria as the share remitted to the Federal Government by the Nigeria Liquefied Natural Gas Company between January and December 2020 exceeded the projected target in the 2020 revised budget of the government by N63.62bn. The projected target was N80.38bn while the actual dividend during the review period was N144bn.
  • On Monday, it was reported that Nigeria emerged as the fourth biggest supplier of crude oil to India in December 2020, overtaking the United States and Brazil.
  • Oil prices climbed with the U.S. stocks market on Tuesday ahead of Joe Biden's inauguration as U.S. president on optimism that more government stimulus will eventually lift global economic growth.
  • Oil price continued its steady rise on Wednesday on expectations the incoming U.S. administration will go ahead with massive stimulus spending that would boost fuel demand and drawdown crude stocks.
  • On Thursday, oil prices steadied after industry data showed a surprise increase in U.S. crude inventories that revived fuel demand worries, while U.S. stimulus hopes supported prices.
  • Brent had a weekly growth of +0.3% (see Table 1).


  • Gold appreciated by +0.6%, reversing the loss recorded in the previous week. Silver also grew by +2% W-o-W (see Table 1).


  • Earlier in the week, it was announced that the Central Bank of Nigeria (CBN) under the Anchor Borrowers' Programme released about 300,000 metric tonnes of maize into the Nigerian market. This move by the CBN is expected to crash the price of maize from the current price of  N155,000 per metric tonne to around N120,000 per metric tonne.
  • Cocoa prices declined by -0.9% this week.
  • Corn prices dipped by -2.9% W-o-W while Sugar also depreciated by -2.9% (see Table 1).

Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: Bloomberg, Proshare Research

*Data for 22nd Jan 2021 is as of 4:34 pm (Nigerian Time)



  • In the coming week, oil prices are expected to be dip marginally as worries that new pandemic restrictions in China will curb demand in the world's biggest oil importer. The U.S. stimulus hopes will cap losses.
  • Gold prices are expected to be depressed in the coming week, with higher yields and strengthening U.S. dollar expected to weigh on the yellow metal.
  • Lockdowns across Europe is yet again expected to weaken demand for cocoa, keeping prices unchanged for the upcoming week.
  • Low supply from the European Union and Thailand is expected to keep Sugar prices high.
  • Corn prices to be bullish in the coming week, as drought expands to some planting regions in the United States. The Truck Strike in Argentina will also support prices as it reduces amount of goods heading to the ports.

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Fixed Income and Money Market 


Money Market

Robust system liquidity estimated at N374.62bn at the start of the week pushed money market rates lower. The trend was maintained for most part of the trading session in the week. However, at the close of the trading session in the week, Open Buyback (OBB) closed at 10.0% while Overnight (O/N) rates closed at 10.5% indicating a Week-on-Week (W-o-W) significant rise of +1900% for OBB and +950% for O/N rates.


Money Market Rate




% Change









Source: FMDQ, Proshare Research

Rates are expected to trend lower in the absence of funding obligations.


Treasury Bills Market

Trading session of the Nigerian Treasury Bills market (NTB) was mixed although on a less aggressive note. At the start of the week average benchmark yield fell by 8bps to settle at 0.3%.


At the close of the week, the average benchmark yields for the T-bills rose marginally W-o-W by +1.96% to close at 0.52% while OMO bills rose by +19.74% to close at 0.91%. Yields for the CBN Special Bill was 0.52% at the close of the week.


Average Benchmark Yields



% Change

T. Bills (%)




OMO Bills (%)








Source: FMDQ, Proshare Research


The CBN issued a total of N170bn at the OMO bills auction in the week. All tenors were oversubscribed, 103-day tenor was oversubscribed by +155%, while 182-day and 362-day were oversubscribed by +300% and +337.69% respectively.


OMO Bill Auction Results


Amount Offered (N'bn)

Total Subscription (N'bn)

Amount Allotted (N'bn)

Stop Rate (%)

103 day





182 day





362 day





Source: CBN, Proshare Research

Participation in the NTB market is expected to be quiet as depressed yields persist.


FGN Bond Market

The overall trading session for the FGN Bond market for the week was bearish for the week. Overall average benchmark yields closed at 3.44% for the week which increased W-o-W by +6.42% with sell interest seen across all tenors.


Average Benchmark Yields




% Change

Short Tenor (%)




Mid Tenor (%)




Long Tenor (%)




Source: FMDQ, Proshare Research


The Federal Government of Nigeria through the Debt Management Office (DMO) issued its first monthly auction for the year. The 10-year and 15-year reopened instruments were oversubscribed by +83.68% and +112.74% while the 25-year re-opened instruments was under subscribed by -19.86%.  DMO raised N122.36bn at the auction which is 81.57% of the amount offered. The original coupon rates of 16.2884% for the 16.2884% FGN MAR 2027, 12.5000% for the 12.5000% FGN MAR 2035 and 9.8000% for the 9.8000% FGN JUL 2045 was maintained.


FGN January Bond Auction Results



Amount Offered (N'bn)

Total Subscription (N'bn)

Amount Allotted (N'bn)

Coupon Rate

Marginal Rate (%)


6 Years, 2 Months







14 Years, 2 Months







24 Years, 6 Months






Source: DMO, Proshare Research

We expect the market to trend on a quiet note as yield opportunities thin out and the absence of another bond auction this month.


FGN Eurobond Market

The overall trading session in the FGN Eurobond market for the week was bullish, investor sentiment was positive. This driven by renewed hopes of a new stimulus package by the Biden-Harris Administration as well as higher crude oil prices. This was despite renewed rising cases of COVID-19.


We expect the market to continue the bearish trend although on a less aggressive note as a result of the increase in COVID-19 cases.


Foreign Exchange Market

It was a quiet market for the Naira this week against major currencies and at the different windows. The Naira closed flat against the USD both at the I & E FX window and the BDC market while at the BDC market it closed flat for the week.


The Naira closed the week at $/N394 at the I&E FX window, at the NAFEX (spot market) it closed at $/N393.88, and at the BDC market, it closed at $/N475, £/N648, and Euros /N580. 

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Nigerian Capital Market

  • The Nigerian Bourse closed the week with a decline of -0.42% WoW as investors lost N81.59bn to close the week negative. YTD return and market capitalization currently stands at +52.75% and N21.45trn. The volume and value of stocks traded on the exchange this week dipped by -11.27% and -20.70% respectively. Investor Sentiment on the market was bearish this week with increase in profit taking on the market.

  • Performance across sectors was broadly negative for the week, NSE-30 was the highest decliner for the week with a loss of -5.42%, NSE Insurance, NSE Banking, NSE Consumer goods, NSE Oil & Gas and NSE-IND dipped this week by -0.80%, -1.33%, -0.09, -0.13% and, -0.51% respectively.


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Chart 1: Movement of NSEASI Index Points 15 Jan.2021 - 22 Jan.2021

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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 740.04 points and N530.99bn with a growth of -0.36% and -0.36% respectively.


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Dangote and Toni Index 


Dangote Index closed the week negative at 124.73 basis points from 126.46 basis points recorded the previous week, a decline of -1.37% DANGCEM recorded a decline in share price by -1.27%, DANGSUGAR dipped by -2.88% WoW and NASCON  also closed negative by -1.99% WoW. DANGSUGAR recorded the highest decline WoW.


Table 2: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed negative at 107.02 basis points from 109.88 basis points recorded the previous week, a W-o-W decline of -2.60%. TRANSCORP closed the week positive with +16.33%, UBCAP and AFRIPRUD also closed positive with +3.02% and +1.43% respectively. UBA Closed the week negative by -5.95% while TRANSCOHOT closed flat WoW.


Table 3: Toni Index W-o-W Change

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As the first MPC meeting for the year is scheduled to hold in the coming week, we expect investors' attention to be focused on the outcome of the meeting.

In addition, 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 remains positive in the equities market. 

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4.     What To Expect From The Markets This Week - 211220

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