What To Expect From The Markets This Week - 260721


Saturday, July 24, 2021 07:40 AM / Proshare Content / Header Image Credit: EcoGraphics

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Nigeria: Economic Dashboard @ 230721 

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Editor's Note

Source: Proshare Research - July 24, 2021

Nigeria Economy

  • In its recent report titled: 'Of Roads Less Travelled: Assessing the Potential for Migration to Provide Overseas Jobs for Nigeria's Youth', the World Bank noted that Nigeria is experiencing its worst unemployment crisis as the unemployment rate rose five-fold, from 6.4% in 2010 to 33.3% in 2020. The report identified the two recessions suffered by the economy has resulted in high unemployment rates in the country forcing many to seek refugee status in other countries.
  • President, Major General Muhammadu Buhari inaugurated a 15-member Board of the Nigeria Extractive Industries Transparency Initiative. Speaking at the event, the President stated that the NEITI is essential for achieving the country's economic goals, while at the same time ensuring transparency in the management of the nation's natural resources as well as in oil, gas, and mining industries.
  • According to the Nigeria Inter-Bank Settlement System (NIBSS), POS transactions in Nigeria increased to N3.01 trillion in 462.11million transactions as of June 2021, this represents a +50% increase compared to the N2.03trn recorded in the corresponding period of 2020. In comparison to the value of POS transactions in H2 2020, the current figure (N2.72 trillion) represents a +10.3% increase.
  • According to the Chairman, Nigerians in Diaspora Commission, Abike Dabiri-Erewa, the   COVID-19 pandemic has resulted in a -20% reduction in annual diasporan remittances from $25bn to $20bn in 2020. The Chairman disclosed that several programmes are being undertaken by the government to shore up the deficit. Meanwhile, the World Bank had earlier said remittances by Nigerians in the Diaspora fell by -27.7% from $21.45bn in 2019 to $15.5bn in 2020. Remittances represent over 83% of the national budget and 6.1% of the Gross Domestic Product.
  • The Central bank of Nigeria has announced October 1 as the date for the launch of the E-Naira, in a webinar with the fintech community the CBN noted that the digital currency would promote cross border trade, the efficiency of monetary policy, financial inclusion and targeted social intervention.
  • The price of Liquefied Petroleum Gas, also known as cooking gas, has surged by +60% to a record high of N500 per kilogramme, on the back of the devaluation1 of the naira and lingering inadequate domestic supply of the fuel. In addition to unemployment and an already high poverty level, increases in prices of essential products such as LPG is bound to increase the country's misery index. 

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Global Economy

  • The Chinese government has imposed counter-sanctions on US individuals including former US Commerce Secretary Wilbur Ross in response to US sanctions on Chinese officials with the Liaison Office in Hong Kong. The sanctions are the first imposed by China under its new anti-foreign sanction law, which was passed in June. China also imposed unspecified "reciprocal counter-sanctions" on the current or former heads of a range of organisations, including the Congressional-Executive Commission on China, US-China Economic and Security Review Commission, National Democratic Institute for International Affairs, International Republican Institute, Human Rights Watch, and the Washington-based Hong Kong Democracy Council.
  • The Conference Board, A New York-based think tank, noted that its Leading Economic Index (LEI) for the U.S. increased by 0.7% in June to reach 115.1 index points, June's gain in the U.S. LEI was broad-based and so it gives economists reasons to expect that the U.S. will see an uptick in growth although at a slower pace.
  • According to the US Labour Department, the number of Americans seeking unemployment benefits rose last week even as the job market appears to be rebounding on the back of a recovering economy. State officials stated that weekly jobless claims increased from 368,000 the previous week to 419,000, the highest in 8weeks. The increase is however regarded as a blip as a result of some irregular movements in the week-to-week data.
  • Despite a global chip shortage, Japan's exports soared in June arising largely from U.S. demand for cars and China-bound shipments of chip-making equipment, lending credence to an export-led recovery in the world's third-largest economy. Exports rose 48.6% in June from 2020, the fourth straight month of double-digit appreciation, although growth was largely exaggerated by a low base effect. 


Summary and Outlook

Despite oil prices rising above $70/barrel, optimism about greater fiscal space is being dampened by the emergence of the new strand of covid 19 virus questioning once again the revenue diversification efforts of the government. Asides from oil proceeds, the government plans to fund critical infrastructure by raising the tax rate but economists recommend as a counter-cyclical policy that the government embarks on a largescale public-private partnership.


The MPC meeting scheduled for next week would likely see the MPC hold parameters given that recent inflation figure (17.75%) suggests that prices would continue to fall although it is expected to still remain high. The MPC would also consider positive developments in the external sector as current account deficits reduced in June to less than 2% of GDP from 3% GDP last year.

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Commodities Market

Weekly Review and Outlook



  • The Special Assistant on Media to the Minister of State for Petroleum Resources, Garba-Deen Muhammad on Tuesday said Nigeria is to ramp up crude oil production following the agreement reached by OPEC and its allies to increase output. The Group General Manager, Group Public Affairs Division of NNPC, Kennie Obateru, also confirmed that OPEC and its allies would deploy its parameters to determine the oil production of its members going by the 400,000 barrels' increase. He added that the $1.5bn rehabilitation of the Port Harcourt Refining Company has commenced in full and part of the facility will start delivering refined products by September 2022.
  • On the alleged under-remittance of N3.8 trillion from crude oil sales to the Federation Account between January and December 2015 against the NNPC, the corporation said the allegation had been resolved by a Forensic Audit carried out by the Ministry of Finance in 2015 which showed a net indebtedness in favour of NNPC. It added that the amount allegedly under-remitted was the applicable subsidy and unrealised revenue from petroleum products sales and other operational costs for the period.
  • The Nigerian Association of Road Transport Owners (NARTO) said the decision to limit oil import licence to local refiners as provided in the bill may worsen the prevailing situation in the downstream sector of the industry. The group also called for inclusion in the boards of the industry regulators, particularly in the downstream sector to strengthen effective and efficient distribution.
  • The NNPC, in its latest monthly report, said Nigeria lost an estimated N53.26bn in gas flaring in the first two months of this year as international oil companies and local players flared a total of 33.04 billion standard cubic feet of natural gas.
  • Nigeria's Bonny Light crude selling above $75 per barrel earlier this week dropped to $68 per barrel on Wednesday on the backdrop of rising inventory by the American Petroleum Institute (API).
  • Punch Nigeria on Thursday reported that the price of Liquefied Petroleum Gas, also known as cooking gas, has increased to a record high of N500 per kg. The price has risen by more than 60% since early December 2020 due to the devaluation of the naira and persistent shortfall in the domestic supply of cooking gas.


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  • The OPEC+ ministers, on Sunday, agreed to boost oil supply monthly by 400,000 bpd from August 2021 to cool oil prices which have climbed to almost three years high as the global economy recovers from the coronavirus pandemic. The UAE saw its baseline production increased to 3.5 million bpd from May 2022 from its present 3.168 million bpd. Saudi and Russia also saw an increase to 11.5 million bpd each from the current 11 million. Iraq and Kuwait got an increase of 150,000 bpd each.
  • Oil prices fell sharply on Monday after OPEC+ overcame the internal divisions and agreed to boost output, sparking concerns about a crude surplus as COVID-19 infections rise in many countries.
  • The Iranian government on Tuesday said the draft agreement between Iran and world powers over the possible restoration of the so-called nuclear deal is incompatible with a recently passed Iranian law. According to the Iranian government, the law obliged the Iranian government to limit inspections of nuclear sites and to expand uranium enrichment for peaceful purposes.
  • A Chinese logistics company, China Concord Petroleum Co., currently under US sanction, has been the key intermediary helping Iran and Venezuela to export their crude oil in revolt to the U.S. sanctions against the two OPEC members.
  • Iran, on Thursday officially opened the country's new oil export terminal built as an alternative tankers route to the Strait of Hormuz. The outgoing President Hassan Rouhani said the new crude export terminal shows the failure of US sanctions on Iran while senior Iranian officials said the country hopes to export its first oil cargo through the terminal soon.
  • Oil fell further, on Friday, below $74 a barrel but on track to end the week largely unchanged after rebounding from a sharp drop on Monday, on the back of expectations that supply will remain tight as demand recovers.
  • Brent had a weekly growth of 0.16% (see Table 1).


Gold depreciated by -0.64% while Silver dipped by -1.83% W-o-W (see Table 1).


  • Cocoa prices grew by 0.43% this week.
  • Corn prices declined by -2.54% W-o-W while Sugar appreciated by 3.40% (see Table 1).


Table 1Weekly Change in Commodity Prices





Weekly Chg






































Source: Bloomberg, Proshare Research

*Data for 23rd July 2021 is as of 5:49pm (Nigerian Time)



  • In the coming week, oil prices are expected to be bullish on expectations of tighter supplies through 2021 as economies recover from the coronavirus crisis.
  • Gold prices are expected to dip in the coming week, amid a stronger dollar and rebounding yields.
  • Cocoa prices to be bearish next week as the market struggles to absorb excess supplies following bumper harvests in top growers Ivory Coast and Ghana.
  • Sugar prices are expected to be rise next week as a recent cold spell cuts cane output expectations in Brazil.
  • Corn prices are expected to be bullish next week amid severe drought in the United States.

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Fixed Income and Money Market 


Currency Market

The currency market was flat at the BDC market while it depreciated at the I & E Fx window on a week-on-week (W-o-W) basis.


It remained flat against the US dollar at the BDC to close at US$/N500, against the British pound it appreciated by -0.70% to close at £/N705, and against the Euro by -0.83% to close at €/N595.


At the I & E FX window, the Naira depreciated W-o-W by +0.07% and -0.03% at the NAFEX window.


The Naira closed the week at $/N411.50 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.11.





% Change

I & E FX Window ($/N)








BDC ($/N)




Source: FMDQ, AbokiFX, Proshare Research


Money Market

Funding rates continued their single-digit trend this week, due to inflows of N49.4 billion and N37.6 billion from LDR and Repo facilities at the end of the week, hence, causing interbank rates to fall.


However, at the close of the trading session on Friday, funding rates rose significantly. Open Buyback (OBB) closed at 27.50% while Overnight (O/N) rates closed at 28.75% indicating a W-o-W rise of +511.11% for OBB and +505.26% for O/N rates.


Money Market Rate




% Change

OBB (%)




O/N (%)




Source: FMDQ, Proshare Research

Funding rates are expected to trade in double digits trend in the coming week in the absence of any maturity.


Treasury Bills Market

The treasury bill market was quiet for most of the trading session this week.


At the close of the market on Friday, average benchmark yields for T-bills increased by +3.14% to 6.90% while OMO bills fell more significantly by -7.75% W-o-W to close at 8.57%, CBN’s Special Bill fell by –0.24% to close at 8.35%.


Average Benchmark Yields



% Change

T. Bills (%)




OMO Bills (%)








Source: FMDQ, Proshare Research


We expect activity next week to be dictated by the market liquidity situation.

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FGN Bond Market

The Bond market started the week on a relatively quiet note as the bulk of the attention was skewed toward the Bond auction.


At the close of the week, the overall market was bullish with selling interest seen across the board.


The overall average benchmark yields closed at 9.62% for the week which fell W-o-W by -0.70%.


Average Benchmark Yields



% Change

Short Tenor (%)




Mid Tenor (%)




Long Tenor (%)




Source: FMDQ, Proshare Research 


Successful bids for the 13.9800% FGN FEB 2028, 12.4000% FGN MAR 2036 & 12.9800% FGN MAR 2050 were allotted at the Marginal Rates of 12.3500%, 13.1500%, and 13.2500%, respectively. However, the original coupon rates of 13.9800% for the 13.9800% FGN FEB 2028, 12.4000% for the 12.4000% FGN MAR 2036, and 12.9800% for the 12.9800% FGN MAR 2050 will be maintained. For more details, visit proshareng.com


FGN Eurobond Market

Activity in the Eurobond market maintained its weak trend with minimal volumes traded across the board. Average benchmark yields dipped marginally by -0.18% to close at 5.54% on a W-o-W basis.



We expect the relatively quiet trend to persist in the near term.

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Nigerian Capital Market

  • It was a brief trading week as the Federal Government of Nigeria declared Tuesday 20th and Wednesday 21st July 2021 as Public Holidays to commemorate the Eid el-Kabir celebration. The Nigerian bourse closed the week on a positive with some cherry picking and bargain hunting. The NGXASI closed the week on a negative note with a growth of +1.90%. The Nigerian Stock Exchange gained N375.50bn, year-to-date return moderated to -3.98%, while the market capitalisation settled at N20.15 trillion.
  • The volume and value of stocks traded on the exchange this week advanced by +13.36% and +34.04% respectively.
  • Sectoral performance across sectors tracked was broadly positive this week as the NGX Oil and Gas was the highest gainer for the week with +7.53% while NGX Insurance recorded the highest decline with -0.74%. NGX IND, NGX-30, NGX Consumer Goods, and NGX Banking closed the week with +4.06%, +1.94%, +0.57% and +0.44% respectively.
  • Market breadth for the week closed positive with 43 gainers led by CUTIX and TOTAL as against 16 losers led by SMURFIT and SOVRENINS

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Chart 1: Movement of NSEASI Index Points 16 July. 2021- 23 July. 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 positive movement in Market capitalization and NSI. The NSI and Market capitalization closed the week at 754.11 points and N655.45 with a decline of +0.04% and +0.04% respectively.


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Dangote and Toni Index   

Dangote Index closed the week negative with 130.62 basis points from 121.61 basis points recorded the previous week, representing a decline of +7.41%.


DANGCEM and DANGSUGAR recorded a growth of +7.83% and +1.15% respectively while NASCON closed the week flat W-o-W.




Table 2: Dangote Index W-o-W Change

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Furthermore, the Toni Index closed positive with 99.82 basis points from 97.54 basis points recorded the previous week, a W-o-W growth of +2.34%.


AFRIPRUD, TRANSCORP, UBA and UBCAP and closed the week positive with +10.40%, +2.17%, +0.65% and +13.08% respectively while TRANSCOHOT 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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1.      Average Price of 1kg of Tomato Increased by 13.92% YoY in June 2021 - NBS

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