What To Expect From The Markets This Week - 190421

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Saturday, April 17, 2021 07:30 AM / Proshare Content / Header Image Credit: EcoGraphics


  

Nigeria: Economic Dashboard @ 160421 

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Editor's Note

Source: Proshare Research - April 17, 2021

Nigeria Economy

  • According to a statement by the Bank of Industry Group, it recorded a +78.8% rise in its assets from N1.04trn in 2019 to N1.86trn in 2020. The rise was attributed to the successful debt syndication of 1bn Euros and $1bn that was concluded in March and December 2020, respectively. Furthermore, it noted that its total equity rose by +14.8% from N293.08bn in 2019 to N336.48bn in 2020 while its loans and advances rose marginally in 2020 by +1.3% to N749.84bn. Also, the bank explained that the decline in its profit before tax by -9.6% from N39.34bn in 2019 to N35.54bn in 2020 was largely due to the economic slowdown in the year as well as the various interventions and support initiated by the bank for its customers.
  • According to the NBS data in its Commodity Price Indices and Terms of Trade Q4 2020 report, Nigeria's major export and import market in the fourth quarter of 2020 were India, Spain, Netherlands, United States, and China. The major export to these countries was crude petroleum and natural gas while the major imports from these countries were motor spirits, used vehicles, motorcycles, and antibiotics. Furthermore, it stated that the all-commodity group import index increased by +0.13% between October and December 2020. The rise in the index was driven mainly by an increase in the prices of base metals and articles of base metals, boilers, machinery and appliances, parts thereof, and products of the chemical and allied industries. However, it noted that the index was negatively affected by animal and vegetable fats and oils, and other cleavage products.
  •  According to the Nigeria Inter-Bank Settlement System, the value of transactions carried out online by bank customers grew by +99% to N22.77trn in March 2021. Bank customers conducted the transactions on the NIBSS Instant Payment, Point of Sales, and electronic bills platforms. NIP was the most preferred platform in March, accounting for N22.02trn of the total online transactions' value. The instant payments were carried out by customers via bank branches, Internet banking, mobile apps, Automated Teller Machines, and Unstructured Supplementary Service Data. Transactions completed through PoS terminals in the month amounted to N531.38bn while the value of electronic bill payments for the month was N212.92bn in March 2021.
  • According to the NBS, Nigeria's headline inflation rose to 18.17% in March 2021 which is 0.82 percent points higher than the rate recorded in February 2021 (17.33%). Increases were recorded in all COICOP divisions that yielded the headline index. The composite food index rose by 22.95% in March 2021 from 21.79% in February 2021. This rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam & other tubers, meat, vegetables, fish, oils and fats, and fruits. The "All items less farm produce" or Core inflation, which excludes the prices of volatile agricultural produce stood at 12.67 percent in March 2021, up by 0.29 percent when compared with 12.38 percent recorded in February 2021. The highest increases were recorded in prices of passenger transport by air, medical services, miscellaneous services relating to the dwelling, passenger transport by road, hospital services, passenger transport by road, pharmaceutical products, paramedical services, vehicle spare parts, dental services, motor cars, maintenance and repair of personal transport equipment, and Hairdressing salons and personal grooming establishment.


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Global Economy

  • China's export rose significantly in March while its imports growth increased to the highest in four years. Export in dollar terms soared by +30.6% in March from a year earlier while its imports increased by +38.1%. Meat imports of 1.02m tonnes in March marked the highest monthly volume since at least January 2020, while imports for soybeans, iron ore, copper, and crude oil also increased.
  • China's economy grew by +18.3% in Q1 2021, the biggest increase in its GDP since it began keeping quarterly records in 1992. Other key statistics released by China's statistics departments indicate a continuing rebound. Its industrial output rose by +14.1% in March while its retail sales grew by +34.2%.
  • According to the United States Bureau of Labour Statistics, US Consumer Price Index for all Urban Consumers rose 0.6% in March, after rising by 0.4% in February i.e., the largest one-month increase since August 2012. The rise in the CPI was largely attributed to the rise in petrol price which increased by +9.1% in March (M-o-M).
  • IMF downgraded its forecasts for several Southeast Asian economies despite its optimism about the global economy and Asia-Pacific more broadly. The IMF expects the five largest developing economies in Southeast Asia to collectively grow by +4.9% in 2021, down from its previous projection of +5.2%. The five economies include Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. The downgrade in their forecast was attributed to an increase in Covid cases and renewed lockdowns dampening the economic prospects of some Southeast Asian countries.
  • According to data Australian Bureau of Statistics (ABS), 70,700 net new jobs were created in March, double forecasts of a 35,000 gain.  Unemployment declined to 5.6% from 5.8% in February, marking a remarkable recovery from the top of 7.5% hit last July when coronavirus lockdowns tipped the economy into recession. The Australian economy has now recovered all the 878,000 jobs lost to the lockdown.


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Commodities Market

Energy

Domestic

  • NNPC on Tuesday announced that there was 37.21% decrease in cases of pipeline vandalism across the country in the month of January 2021. It said a total of 27 pipeline points were vandalised in January 2021, down from the 43 points recorded in December 2020. In its March report, Nigeria produced 1.57 million barrels per day last month, a 30,000 bpd rise from February, and 70,000 bpd above its quota. The corporation said it supplied a total of 1.44 billion litres of Premium Motor Spirit, popularly called petrol in January 2021. It stated that a total of 223.55 billion cubic feet of natural gas was produced in the month of January 2021.
  • OPEC in its monthly report said Nigerian crude oil (Bonny Light, Forcados and Qua Iboe) were sold at deeper discount despite the fact that Nigeria produces some of the easiest-to-refine crude that typically commands a premium over Brent.
  • Crude imports by India, the biggest buyer of Nigerian oil, continued to decline sharply in February, averaging just under four million bpd, the lowest in four months, as renewed COVID-19 impacts, and increased prices weighed on demand for crude imports.
  • The NBS gave the report of its fuel prices survey conducted across 774 local governments across all states and the FCT from over 10,000 respondents and locations, including its 700 NBS staff in all states of the federation. It shows that all the fuel prices listed including PMS, diesel, household kerosene, and cooking gas increased m-o-m from Feb to March. Only 12.5kg cylinder for Liquefied Petroleum Gas (Cooking Gas) decreased by -0.10% month-on-month Lagos, Ebonyi, Niger residents pay highest for petrol in March.
  • Earlier in the week, BUA and French firm Axens confirm progress on 200,000bpd refinery in Akwa Ibom State.

 

Foreign

  • The average global crude oil prices have continued to rise for the fifth consecutive month. Attributable to supportive oil market fundamentals deployed by OPEC to stem the earlier plunge in crude oil costs.
  • OPEC on Tuesday raised its forecast for growth in world oil demand this year on expectations the pandemic will subside. It says demand will rise by 5.95 million barrels per day (bpd) in 2021, or 6.6% in its monthly report. That is up 70,000 bpd from last month.
  • China's record imports of Iranian crude in recent months have squeezed out supply from rival producers, forcing sellers of oil from countries such as Brazil, Angola and Russia to slash prices and divert shipments to India and Europe.
  • Oil prices surged slightly after a report by IEA boosted optimism about returning demand after the coronavirus lockdowns last year crushed fuel consumption.US crude inventories fell by 5.9 million barrels last week exceeding analysts' forecasts for a 2.9-million-barrel drop.
  • Iran sent out a warning this week that it does not plan to let nuclear negotiations drag and has threatened to pull out of the talks if they are not constructive. The fresh warning from Iran comes the same day it has initiated its uranium enrichment process up to 60% purity as retaliation for Sunday's Natanz nuclear facility sabotage attack, widely blamed on Israel.
  • Brent had a weekly growth of 5.84% (see Table 1).


Metals

  • Gold appreciated by 1.86% as retreating U.S. Treasury yields and a softer dollar bolstered the metal's appeal, while Silver also grew by 2.85% W-o-W (see Table 1).

 

Agriculture

  •  Cocoa prices grew by 3.06% this week.
  • Corn prices declined by -0.73% W-o-W while Sugar also appreciated by 5.49% (see Table 1).

 

Table 1Weekly Change in Commodity Prices

Commodity

16-Apr-21

09-Apr-21

31-Dec-20

Weekly Chg

YTD Chg

Brent

66.67

62.99

51.8

5.84%

28.71%

Gold

1778.17

1745.77

1898.67

1.86%

-6.35%

Silver

26.01

25.29

26.4011

2.85%

-1.48%

Cocoa

2461

2388

2597

3.06%

-5.24%

Corn

576.25

580.5

484

-0.73%

19.06%

Sugar

16.33

15.48

15.28

5.49%

6.87%

Source: Bloomberg, Proshare Research

*Data for 16th Apr 2021 is as of 3:55pm (Nigerian Time)

 

Outlook

  • In the coming week, oil prices are expected to rise marginally on positive U.S. economic data, signs of economic recovery in China and higher demand forecasts from energy agencies.
  • Gold prices are expected to be little changed in the coming week, as U.S. treasury yields and the greenback keeps pressuring the precious metal.
  • Cocoa prices to decline next week on sluggish demand and production surplus.
  • Sugar prices are expected to rise next week due to supply tightness.
  • Corn prices are expected to rise in the coming week on strong demand by China.

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Fixed Income and Money Market 

Money Market

Funding rates continued in their double-digit trend for most of the trading session this week which was supported by lower system liquidity this week.

 

At the close of the trading session, this week's funding rates were up significantly. Open Buyback (OBB) closed at 25.0% while Overnight (O/N) rates closed at 28.33% indicating a Week-on-Week (W-o-W) rise of +104.08% for OBB and +126.64% for O/N rates.

Money Market Rate

 

09-Apr-21

16-Apr-21

% Change

OBB

12.25

25.00

+104.08%

O/N

12.50

28.33

+126.64%

Source: FMDQ, Proshare Research


Rates are expected to continue to trend in the double-digit.

 

Treasury Bills Market

The trading activity for the Nigerian Treasury Bills improved, for the most part, this week.

 

At the close of the week, average benchmark yields for T-bills fell slightly by -1.14% while OMO bills rose +7.00% W-o-W to close at 4.35% and 7.18% respectively. Yield for CBN's Special bills also rose by +19.89% W-o-W.

 

Average Benchmark Yields

09-Apr-21

16-Apr-21

% Change

T. Bills (%)

4.40

4.35

-1.14%

OMO Bills (%)

6.71

7.18

+7.00%

SPEB

5.43

6.51

+19.89%

Source: FMDQ, Proshare Research

 

The Central Bank also offered and sold N20.00 billion worth of OMO bills this week. The offer was over-subscribed.  The 89-day, 187-day & 362-day notes were left unchanged from the previous auction at 7.00%, 8.50%, & 10.10% respectively.

 

Also, at the primary auction, the DMO took advantage of ample demand to raise +255.66% higher than its intended offer, maintaining rates on the 91 and 182-day tenors whilst raising the 1-year rate by 100bps to close at 9.00%. The 91-day instrument was slightly under-subscribed by -0.31%, while the 182-day and 364-day notes were oversubscribed by +209.78% and +342.80% respectively.

 

PMA Result NTB - April 14, 2021

Tenor

Amount Offered (N'bn)

Total Subscription (N'bn)

Amount Alotted (N'bn)

Rate (%)

Previous Rate (%)

Changes (%)

91 days

15.92

15.87

12.46

2

2

0

182 days

4.5

13.94

8.8

3.5

3.5

0

364 days

49.14

217.59

132.12

9

8

1

Source: CBN, Proshare Research


FGN Bond Market

The Bond market started the week on a relatively quiet note and continued the trend as tight system liquidity continued to dampen market momentum.

 

At the close of the week, the market was bearish overall with selling interest seen across all tenors.

 

The overall average benchmark yields closed at 8.11% for the week which increased W-o-W by +17.42%.

 

Average Benchmark Yields

09-Apr-21

16-Apr-21

% Change

Short Tenor (%)

4.99

5.75

+15.27%

Mid Tenor (%)

6.95

9.68

+39.24%

Long Tenor (%)

11.07

12.74

+15.09%

Source: FMDQ, Proshare Research


The Central Bank of Nigeria on the authority of The Debt Management Office on behalf of the Federal Government of Nigeria Offered for Subscription by Auction of the FGN monthly bond for April 2021.

N50,000,000,000 - 16.2884% FGN MAR 2027 (10-Yr Re-opening) *

N50,000,000,000 - 12.50% FGN MAR 2035 (15-Yr Re-opening) *

N50,000,000,000 - 9.80% FGN JUL 2045 (25-Yr Re-opening) *


Auction Date: April 21, 2021


Settlement Date: April 23, 2021


Also, Coronation Merchant Bank Limited (Coronation MB) intends to raise NGN25bn via Series XV and XVI Commercial Paper issuance under its NGN100bn Commercial Paper Programme.

 

Visit proshareng.com for details on the debt issue.

 

MTN Nigeria Communications PLC also announced the issue of its Series I Bonds of about N100 billion under its N200 billion Bond Issuance Program this week.

 

Details in proshareng.com

 

FGN Eurobond Market

The overall trading session in the FGN Eurobond market was mixed, as investor sentiments were influenced by the depressed US treasury Yield caused by the rise in the US inflation data, and profit-taking activity was seen across the board following last week bullish run.

 

For the FGN Eurobond market, we expect the market to continue to react to the news both on the domestic level and international level especially to movement in crude oil prices and the US treasuries will respond to President Biden's US$2trn plan.

 

Foreign Exchange Market

The Naira against major currencies was flat at the BDC window, at the I&E FX window, Naira declined by-0.49%

 

The Naira closed the week at $/N411.00 at the I&E FX window, at the NAFEX (spot market) it closed at $/N408.54, and at the BDC market, it closed at $/N482, £/N670, and Euros /N568. 



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Nigerian Capital Market

  • The Nigerian bourse closed the week negative with a decline of -0.15%. The Nigerian Stock Exchange lost N25.08bn in Market capitalization W-o-W while YTD return and market capitalization currently stands at -3.63% and N20.31trn respectively.
  • The volume and value of stocks traded on the exchange this week advanced by +63.41% and +90.39% respectively. A total turnover of 1.26m shares worth N1.75bn in 19,975 deals was traded this week by investors on the floor of the Exchange.
  • Trading in the top three equities by volume were FIDELITYBK, FBNH and ACCESSBANK. They accounted for 390.77m shares worth N2.02bn in 3,241 deals, contributing 30.94% and 18.78% to the total equity turnover volume and value respectively.
  • Performance across sectors tracked was broadly negative this week as the NSE-IND was the highest gainer for the week with +0.95% while NSE Insurance,  recorded the highest loss for the week with -4.23%, NSE Banking, NSE Consumer Goods Index, NSE-30, and NSE Oil & Gas declined by -1.51%, -0.61%, -0.29% and -0.29% respectively.
  • Market breadth was negative for the week with 18 gainers led by FTNCOCOA and MORISON as against 47 losers led by CUSTODYINS and NNFM

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Chart 1: Movement of NSEASI Index Points 09 Apr. 2021 - 16 Apr. 2021

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Source: NSE, Proshare Research

 

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NASD OTC

 

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 767.43 points and N545.50bn with a growth of +1.53% and +1.53% respectively.


 

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Dangote and Toni Index 

 

Dangote Index closed the week positive with 116.46 basis points from 113.99 basis points recorded the previous week, a growth of +2.17%.


DANGCEM closed positive with +2.33%, NASCON  closed flat WoW,  while DANGSUGAR dipped by -0.29% WoW. DANGSUGAR recorded the highest growth W-o-W.


 

Table 2: Dangote Index W-o-W Change

 

Company

09-Apr-21

16-Apr-21

WoW Chg

DANGCEM

215.00

220.00

2.33%

DANGSUGAR

16.95

16.90

-0.29%

NASCON

15.20

15.20

0.00%

Source: NSE, Proshare Research 


 

Furthermore, the Toni Index closed negative with 86.36 basis points from 86.98 basis points recorded the previous week, a W-o-W decline of -0.71%

 

UBA, TRANSCORP and UBCAP closed the week negative with -0.71%, -1.25% and -1.48% respectively, AFRIPRUD closed positive WoW with +1.85% while TRANSCOHOT closed flat WoW. 


 

Table 3: Toni Index W-o-W Change


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Outlook

 

Considering the full-year 2020 corporate earnings season has come to an end; as we advance further into Q2 2020, we expect investors to be cautious of Q1 2020 corporate earnings, press releases from listed companies and macroeconomic developments to make investment decisions.

 

In addition, we expect investors’ to monitor the movement of yields in the fixed income market.



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Previous Week(s) Market Outlook

1.      What To Expect From The Markets This Week - 120421

2.     What To Expect From The Markets This Week - 290321

3.     What To Expect From The Markets This Week - 010321

4.     What To Expect From The Markets This Week - 220221

5.     What To Expect From The Markets This Week - 150221


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Latest Reports This Past Week

1.      N1.31trn Generated as IGR in 2020 – NBS

2.     Headline Inflation Increases by 18.17% YoY In March 2021, 0.82% Higher Than February 2021 Rate - NBS

3.     NBS Publishes COVID-19 Impact Monitoring Survey Report for February 2021

4.     Real Household Consumption Expenditure Growth Rate Stood at 0.18% in 2020 - NBS

5.     All Commodity Group Import Index Grew By 0.13% in Q4 2020 - NBS

6.     38.60% of Nigeria's Total Public Debt Was External in Q4 2020 - NBS


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