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Saturday, November 21, 2020 08:00 AM / Proshare Content / Header Image Credit: EcoGraphics
Nigeria: Economic Dashboard @ 201120
Editor's Note
Source: Proshare Research - November 20, 2020
Outlook
The MPC
meeting would take place this week and would face the decision of whether to
cut interest rate or to maintain status quo. Given the consistent rise in
inflation most analyst predict that the MPC would maintain status quo.
GDP figures for
Q3 2020 would be released next week and we expect the Nigerian economy to contract
further but the magnitude of contraction would be less than that of Q2 2020.
Global Economy
Weekly Review and Outlook
Energy
Oil prices
firmed this week, with a weekly growth of +3.49%.
Earlier in the week prices shot up after Moderna's vaccine outweighed Pfizer's
and BioNTech's in efficacy. Also adding to the bullish trend during the week
was the positive news from China where its crude oil refinery throughputs
increased by 2.6% year-on-year in October, setting a new refinery run record of
14.09m barrels per day (bpd).
Lending
support to the market is the hope that OPEC+, comprising the Organization of
the Petroleum Exporting Countries, Russia, and other producers are considering
delaying a plan to boost output in January by 2mbpd. However, the surge in new
cases of the coronavirus around the world capped the gains during the week. (See Table 1)
Metals
Gold prices
experienced a weekly loss of about -1.36% as
investors kept turning a blind eye to the yellow metal. Silver also dropped by -2.1% W-o-W. (See Table 1)
Agriculture
Cocoa prices
had the highest weekly gain amongst the commodities, closing the week with +15.75% growth. Corn
prices moved up by +3.71% WoW while Sugar
also inched up by +2%. (See Table 1)
Table 1: Weekly Change in Commodity Prices
Commodity |
20-Nov-20 |
13-Nov-20 |
31-Dec-19 |
Weekly Chg |
YTD Chg |
Brent |
44.5 |
43 |
66 |
3.49% |
-32.58% |
Gold |
1867.17 |
1892.85 |
1517.27 |
-1.36% |
23.06% |
Silver |
24.21 |
24.73 |
17.85 |
-2.10% |
35.63% |
Cocoa |
2726 |
2355 |
2463 |
15.75% |
10.68% |
Corn |
433 |
417.5 |
388.25 |
3.71% |
11.53% |
Sugar |
15.29 |
14.99 |
13.42 |
2.00% |
13.93% |
Source: Bloomberg, Proshare Research
*Data for 20th Nov 2020 is as of 2:45pm (Nigerian
Time)
Outlook
Money
Market
System
liquidity remained robust for the week following the FX auction as funding
rates were low especially at the beginning of the week, however, the rates
increased at the end of the week. The overnight (O/N) rate was 4.33% while open
buyback (OBB) was 3.33% at the end of the week.
We expect
rates to trend lower in the coming week in the absence of funding obligations
and any other liquidity shocks.
Treasury
Bills Market
Near-zero
rates for the Nigerian Treasury Bill (NTB) instruments continued this week as
we see limited investor interest play out in trading this instrument. The NTB
market started the week on a quiet note which was maintained throughout the
week as a result of system liquidity.
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 as investors reacted to October
inflation figures, with headline inflation higher for the 14th
consecutive month to 14.2%. through the week we see more participation
particularly at the long end of the curve, however on a less aggressive note.
Summary FGN
bond auction for November 2020 shows both the reopened 15-year tenor and
25-year tenor bonds were oversubscribed, albeit at a decreasing rate - that is,
the oversubscription rate has declined compared to pre-COVID-19 levels and when
rates were still relatively high. The 15-year tenor instrument was oversubscribed
by 119.25% while the 25-year dated instrument was oversubscribed by 142.60%.
We expect
the market to trend on a quiet note as yield opportunities thin out and the
absence of bond auction for this month.
FGN
Eurobond Market
The FGN Eurobond
market was supported by positive COVID-19 vaccine news and oil price was mostly
steady through the week. At the close of the week, we saw mixed investor
sentiments in the market as COVID-19 restrictions weighed against the vaccine
progress.
We expect the market participants to continue to react
to events around the global oil price and COVID-19 news.
Foreign
Exchange Market
The Naira
was under pressure for most of the week despite CBN's continuous intervention,
this was as a result of demand for FX swelling faster than the supply. The
Naira closed the week at $/N385.83/at the investors and exporters window
(I&E), at the NAFEX window it closed at $/N385.70, at the Bureau de change (BDC) window it traded at $/N478 on Friday.
We expect
the CBN to continue its FX management strategy in supporting the Naira at the
official and I & E window.
Chart 1: Movement of NSEASI Index Points 16 Nov. 2020 - 20Nov. 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 736.53points
and N547.46bn showing an increase of +1.44% and +2.65% W-o-W respectively.
Dangote Index closed the week negative at 104.57
basis points from 108.51 basis points recorded the previous week, a decline of -3.63%. DANGCEM and DANGSUGAR recorded a decline in their share
prices except for NASCON which recorded a growth W-o-W.
Table 2: Dangote Index W-o-W Change
In the same vein, the Toni Index also closed negative
to close at 99.87 basis points from 111.18 basis points recorded the previous
week, a W-o-W decline of -10.17%. The stocks making up the index all recorded decline
in their share prices except TRANSCOHOT which closed flat W-o-W.
Table 3: Toni Index W-o-W Change
Outlook
As more
corporate results are released, in the coming
week we expect that there will be more profit-taking in the market as investors take positions on the capital
market. Furthermore, constriction in
translating returns on domestic investment into the foreign exchange and low
yields in the fixed income market will put pressure on the Nigerian Stock Exchange.
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Latest Reports This Past Week
2.
NBS Publishes COVID-19 Impact Monitoring Survey
Report for September 2020
3. N424.71bn Generated as VAT in Q3 2020 - NBS
4. FAAC Disburses N682.06bn in September 2020 - NBS
5. Average Prices of 1kg of Rice Increased By 39.07% YoY
in September 2020 - NBS
6. Average Prices of 1kg of Rice Increased By 39.07% YoY
in September 2020 - NBS
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the Week Negative
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