What To Expect From The Markets This Week - 210621


Saturday, June 19, 2021 07:20 AM / Proshare Content / Header Image Credit: EcoGraphics

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Nigeria: Economic Dashboard @ 180621 

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Editor's Note

Source: Proshare Research - June 19, 2021

Nigeria Economy

  • NBS Data on Consumer Price Index for May 2021 shows that headline Inflation has reduced from 18.12% in April 2021 to 17.93%.  A further breakdown of the figures shows that the food sub-index reduced from 22.72% to 22.28% while the core sub-index increased from 12.74% in April to 13.15% for May.   The highest increases in this sub-index were recorded Healthcare services, shoes, carpets pharmaceutical products hairdressing cooking gas, and garments
  • According to the DMO, the Current Administration has borrowed $2.02bn from China in six years. As of June 30, 2015, Debt owed to China stood at $1.38bn. However, as of March 31, the country's debt portfolio from China had risen to $3.40bn. While allaying fears about the terms of the facilities, the DMO explained that loans from China are concessional loans with interest rates of 2.50 %per annum, a tenor of 20 years, and a grace period (moratorium) of seven years.
  • The latest data from the Central Bank of Nigeria shows that Nigeria's external reserves have fallen by $1.4bn in two months. The figures released on Wednesday reveal that the nation's foreign reserves, which stood at $35.25bn as of April 16, had as of May 31 fallen to $34.23bn and $33.85bn as of June 15. The depletion in the reserves is attributed to a drawdown for the onward sale in the foreign exchange market as well as for third-party payments.
  • According to the recently published foreign trade report by the National Bureau of Statistics (NBS), Nigeria's agricultural imports reached N3.1trn in 2 years. This is despite hundreds of billions of Naira spent by the Central Bank of Nigeria to reduce food imports. Nigeria imported agricultural items worth N630.18 billion in Q1 2021 the highest quarterly agricultural import recorded since 2016. Major agricultural imports in this period include durum wheat, blue whiting, malt, and other edibles.
  • According to the World Bank's recently released 'Resilience through Reforms' report, the Federal Government would have to incur N3.08tr through 2023 to keep electricity tariffs at their current levels. The Bank rued the government's regulation of tariffs in the sector rather than allowing market forces to determine the rates electricity users pay.
  • CBN Governor, Godwin Emefiele announced earlier in the week that the Central Bank of Nigeria and its Gambian counterpart have agreed to a partnership that would see the Nigerian Security and Minting Company Printing the Gambian currency. This is part of efforts made by the Central Bank of Gambia (CBG) to reduce its currency printing cost.


Summary& Outlook on the Nigerian Economy

In the fiscal space, we have continued to witness aggressive interventions from the government in the form of new approvals of power projects across the country, the construction of the eastern railway, recruitment under the NPower scheme, and the continuous subsidy of PMS.  Analysts however express concerns about the sustainability of the debt-financed budget deficit of the country. In the Monetary space, the CBN has continued to advance lending facilities to the Agricultural sector through the ABP in a bid to stimulate growth but with concerns for the collateral effect on the general price level. A look at the external sector shows imports are rising including imports of agricultural products. Given the security situation in the country, we may well see the trade deficit further widen. 

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Global Economy

  • Federal Reserve officials decided to hold interest rates near zero but the median member of the FOMC hinted at two hikes in the rate by the end of 2023.  The Committee holds the target range for its benchmark policy rate unchanged at zero to 0.25% where it's been since March 2020 while pledging to continue the purchase of assets to the tune of $120 billion monthly until employment and inflation figures improve.
  • US Commerce Department recently reported that the consumer price index (CPI) increased by 0.6% in May. Therefore, the general price level had risen by 5% since last May 2020. This far exceeds the Biden administration and the Federal Reserve's target of 2%. While the government believes that the rise in inflation is transitory, there are concerns about the rate going higher.
  • According to EY Financial Services, the English Premier League contributed £7.6bn to the UK economy in the 2019-20 season the same as its contribution in the 2016-17 season. This is attributed to a fall in broadcast income, due to Covid protocols, and matchday revenue which was considerably affected as fans were not allowed to visit stadia.
  • Data released by ONS earlier in the week reveals that UK inflation surged to 2.1 % in May, up from 0.5 %year-on-year.  The rise, which brought inflation to its highest since the pandemic, has been attributed to an increase in fuel costs and rising clothing prices. The Bank of England had targeted inflation of 2% while analysts had penciled in an inflation rate of 1.8%.
  • French Finance Minister Bruno Le Maire announced on Thursday that there were no plans to raise taxes despite the huge deficit. This is against the backdrop of plans to reduce the country's debt to GDP ratio from a record high of 9.4% which it reached this year to less than 3% by 2027.
  •  Indian Ministry of Statistics and Programme Implementation (MoSPI) on Monday made it known that retail inflation had reached a 6-month high of 6.3% in May due to low base effect, as well as higher food and fuel prices. Food inflation rose to 5.01 %in May, as against 1.96 % in April. Earlier in April, CPI inflation had fallen to a three-month low of 4.23 %.

Summary & Global Outlook 

The global economy is seeing moderate growth because of huge deficit spending although consistent with rising prices and worrisome inflationary pressures. This is as policy authorities in leading economies have seemed to combine increased money supply, quantitative easing in the form of purchase of bonds with higher corporate taxes. With inflation expectations up, we can expect actual inflation to rise in almost the same measure.

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Commodities Market

Weekly Review and Outlook



  • The Federal Government of Nigeria, on Monday, charged oil and gas industry operators to move beyond conferences and workshops to take concrete steps to develop Nigeria's huge natural gas reserves which had grown by 3.37tcf to 206.53 trillion cubic feet. The President, GE Nigeria, Mohammed Mijindadi noted that Nigeria can generate as much as 45,000 Megawatts of power from its existing gas reserves.
  • S&P Global Platts reported, on Monday, that Nigerian crude variants are seeking other buyers in Asia and Europe as India's COVID-19 situation remains wrapped in lockdowns with weak domestic consumption. It noted that Indian Oil Corporation last bought crude loading for mid-to-late June in April 2021.
  • On Tuesday, President Muhammadu Buhari inaugurated the construction of the Nigeria Liquefied Natural Gas train 7 project located in Bonny Island, Rivers State. The Managing Director and Chief Executive Officer of NLNG, Tony Attah, said Train 7 would increase NLNG's total capacity to 30 million tonnes per annum from the current 22 million tonnes per annum
  • On Wednesday, the Nigerian National Bureau of Statistics released a report that showed that the average price paid by consumers for premium motor spirit (petrol) increased by 29.61% year-on-year and month-on-month by 1.01% from N166.38 in April 2021 to N168.06 in May 2021.
  • Also on Wednesday, Ardova Plc (formerly Forte Oil Plc) said it has reached an agreement with Enyo Retail and Supply Holding Limited to acquire a 100 percent equity stake in Enyo Retail and Supply Limited.
  • On Thursday, NNPC through its subsidiary, Duke Oil, said it has sealed a crude oil supply deal of 30,000 barrels per day with Indonesia's state oil corporation, Pertamina, and Indian Oil Corporation.


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  • Oil prices rose on Monday, extending the three weeks of gains underpinned by an improved outlook for fuel demand as increased COVID-19 vaccinations help lift travel curbs, along with tightness in supply.
  • India's fuel demand jumped by 13 percent in the first two weeks of June, a first monthly rise since March, suggesting that the worst of the impact of the second COVID wave has peaked, and consumption is rebounding.
  • Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman, on Wednesday, said a supercycle in oil prices is looming as there is a lack of new investments in exploration.
  • OPEC Secretary-General, Mohammad Barkindo, on Thursday, said energy transition should not crowd out any source of energy as all energy sources will be required for the foreseeable future.
  • Oil prices on Friday fell for a second straight session as the U.S. dollar soared on the prospect of interest rate hikes in the United States, but they were on track to finish the week little changed and only slightly off multi-year highs.
  • Brent had a weekly growth of 0.72% (see Table 1).


 Gold dived by -5.97% while Silver also dipped by -7.67% W-o-W (see Table 1).


Cocoa prices slid by -0.75% this week.

Corn prices depreciated by -9.16% W-o-W while Sugar also declined by -4.84% (see table 1 below).


Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: Bloomberg, Proshare Research

*Data for 11th June 2021 is as of 2:47 pm (Nigerian Time)



  • In the coming week, oil prices are expected to hold steady as the U.S. dollar soars on the prospect of interest rate hikes in the United States.
  • Gold prices are expected to be bearish in the coming week, as the dollar continues to strengthen.
  •  Cocoa prices to decline next week on weak global demand.
  • Sugar prices are expected to be little changed next week amid soaring ethanol prices and concerns over top producer Brazil's drought-hit sugar cane crop.
  • Corn prices are expected to be bullish next week amid severe drought and bad weather in Brazil and the United States.

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Fixed Income and Money Market 


Currency Market

The currency market was bearish at the beginning of the week at the BDC window. However, towards the end of the week, we saw a bullish reversal which was supported by CBN's announcement to increase forex supplies for Personal Travel Allowance (PTA), Basic Travel Allowance (BTA), tuition fees, and medical payments as well as Small and Medium Enterprises transactions.


It appreciated against the US dollar, British Pound, and Euro by -2.61%, 0.42%, -0.82% respectively closing at $/N485, £/N715, and €/N603 at the BDC window. 


At the I & E FX window, the Naira depreciated marginally week-on-week by +0.01% and appreciated +0.02% at the NAFEX window.


The Naira closed the week at $/N411 at the I&E FX window, at the NAFEX (spot market) it closed at $/N410.24.





% Change

I & E FX Window ($/N)








BDC ($/N)




Source: FMDQ, AbokiFX, Proshare Research


Money Market

Open Buy Back (OBB) and the Overnight (OVN) rates opened the week on a positive note by declining by 733bps and 776bps to 15.00% and 15.17%, respectively. This trend did not continue throughout the week as rates expanded as a result of CBN's OMO Bills and Treasury Bills auction which constrained system liquidity.


At the close of the trading session this week, funding rates declined. Open Buyback (OBB) closed at 18.75% while Overnight (O/N) rates closed at 19.25% indicating a Week-on-Week (W-o-W) rise of -16.03% for OBB and -16.05% for O/N rates.


Money Market Rate




% Change

OBB (%)




O/N (%)




Source: FMDQ, Proshare Research

Funding rates are expected to trend in double digits in the coming week.


Treasury Bills Market

The Treasury bills market maintained its quiet trend this week, and the market ended on a slightly bullish note, majorly CBN's Special Bill.


At the close of the week, the average benchmark yield for T-bills fell marginally by -0.12% to close at 6.35% while OMO bills rose by +0.18% W-o-W to close at 9.66%, CBN's Special Bill declined significantly by -9.07%.


Average Benchmark Yields



% Change

T. Bills (%)




OMO Bills (%)








Source: FMDQ, Proshare Research


We expect the activity in the treasury bills market to remain subdued next week as system liquidity remains relatively tight.


The CBN offered N20 billion worth of OMO notes but sold N17.30 billion at its auction this week. The offer was over-subscribed. The 89-day, 159-day & 348-day notes were allotted at 7.00%, 8.50%, and 10.10% respectively.


The CBN sold N30.56 billion worth of notes against N14.83 billion offered at its NTB auction today. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, & 9.40% respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper fell slightly by 24bps.

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FGN Bond Market

The Bond market resumed its relatively quiet trend in this week's session as the thin offers in the market continue to dampen market activity.


At the close of the week, the overall market was bearish with selling interest seen at the short and mid-end of the curve.


The overall average benchmark yields closed at 9.87% for the week which rose W-o-W by +0.88%.


Average Benchmark Yields



% Change

Short Tenor (%)




Mid Tenor (%)




Long Tenor (%)




Source: FMDQ, Proshare Research 


FGN Eurobond Market

The Eurobond market maintained its relatively weak trend today as market participants await the outcome of the FOMC meeting. At the end of the week, selling interest was seen across the board in the Eurobond market following the outcome of the FOMC meeting as the US Fed started the discussion on scaling back its bond purchase.


The average benchmark yield closed at 5.62% at the end of the week declining W-o-W by -4.96%.


We expect market sentiment will remain soft in the near term as economic data continues to dictate market direction.

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Nigerian Capital Market

  • The Nigerian bourse closed the week on a negative note with a decline of -1.30%. The Nigerian Stock Exchange lost N266.03bn thus, year-to-date return moderated to -4.03%, while the market capitalization settled at N20.41 trillion.
  • The volume and value of stocks traded on the exchange this week declined by -23.68% and -28.67% respectively.
  • Sectoral performance across sectors tracked was significantly bullish this week as the NSE Banking was the highest gainer for the week with +1.48% while NSE-IND recorded the highest decline with -0.05%. NSE Oil and Gas, NSE Insurance, NSE-30 and, NSE Consumer Goods closed the week positive with +1.05%, +0.76%, +0.29% and +0.25% respectively.
  • Market breadth for the week closed positive with 38 gainers led by BERGER and LASACO as against 25 losers led by UACN and AIRTELAFRI

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Chart 1: Movement of NSEASI Index Points 11 June. 2021- 18 June. 2021

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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 negative movement in Market capitalization and NSI. The NSI and Market capitalization closed the week at 746.19 points and N530.40bn with a decline of -0.01% and -0.01% respectively.


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Dangote and Toni Index  

Dangote Index closed the week flat with no movement in basis points



Table 2: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed positive with 93.17 basis points from 91.63 basis points recorded the previous week, a W-o-W growth of +1.68%.

TRANSCORP, UBA  and AFRIPRUD closed the week positive with +2.22%, +2.10% and, +1.59% respectively while UBCAP closed negative with -0.32%. TRANSCOHOT and closed flat W-o-W.


Table 3: Toni Index W-o-W Change

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In the coming week, we expect the possibility of sustained bargain hunting as investors look to take advantage of good bargains, however, press releases from listed companies and other macroeconomic developments is likely to impact investors' 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

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Latest Reports This Past Week

1.      Headline Inflation Increases by 17.93% YoY In May 2021, 0.19% Lower Than April 2021 Rate - NBS 

2.     FAAC Disburses N640.31bn in February 2021 - NBS 

3.     Active Voice Subscribers Declined by -5.96% QoQ in Q1 2021 - NBS 

4.     Average Prices of 1kg of Tomato Increased by 0.09% YoY in April 2021 - NBS 

5.     Average Fare Paid by Commuters for Intercity Bus Journey Increased by 1.48% MoM in April 2021 - NBS 

6.     Average Fare Paid by Commuters for Intercity Bus Journey Increased by 1.48% MoM in April 2021 - NBS 

7.     Nigeria's Real GDP Grew by 0.51% YoY in Q1 2021 - NBS 

8.     Average Prices of 1kg of Tomato Increased by 0.09% YoY in April 2021 - NBS 

9.     Average Fare Paid by Commuters for Intercity Bus Journey Increased by 1.48% MoM in April 2021 - NBS 

10.  Nigeria's Real GDP Grew by 0.51% YoY in Q1 2021 - NBS 

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