What To Expect From The Markets This Week - 281220


Saturday, December 26, 2020 07:45 AM / Proshare Content / Header Image Credit: EcoGraphics


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Nigeria: Economic Dashboard 251220   

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Editor's Note

Source: Proshare Research - December 26, 2020

Nigeria Economy

  • The N13.5trn 2021 appropriation bill was passed by Nigeria's national assembly. The main highlights of the passed appropriation bill show that the amount earmarked for statutory transfers is N496.53bn, debt service N3.32trn, recurrent expenditure N5.64trn, and capital expenditure N4.13trn.
  • Lingering effects of gas constraints and low load demand by discos affected electricity generation in the country last week, as the electricity generated averaged 4,601.33MW.  According to daily generation figures collated from the Nigerian Electricity System Operator, power plants connected to the national grid produced a total of 32,209.3MW last week. The plants could not produce 8,924.4MW because of gas supply challenges while 1,182.4MW generation capacity was left idle because of Discos' low demand.
  • The CBN in its survey report titled consumer expectations survey report for the fourth quarter of 2021 noted that most of the consumers surveyed do not have intentions to buy big-ticket items in 2020, considering the current economic conditions. The report noted that consumers' overall outlook was negative in the current quarter, as consumers were pessimistic in their outlook.  However, consumers had a positive outlook for the next quarter and the next 12 months. Overall buying conditions index for big-ticket items in the current quarter stood at 21.6 points. Overall buying intention index in the next 12 months stood at 29.9 index points, which implies that most consumers do not intend to buy big-ticket items in the next 12 months.
  • CBN in its Q3 economic report noted that deposit money banks and merchant banks continually accessed the standing facilities window to improve their positions in Q3 2020. The report revealed that the total standing lending facility granted in Q3 2020 was N1.7trn, made up of N866.93bn direct SLF and N833.53bn Intraday Lending Facilities converted to the overnight repo. Furthermore, the total SDF granted was N1.76trn with a daily average of N37.55bn in 61 transaction days from July 1, 2020, to September 25, 2020.


Global Economy

  • The International Labour Organization in its Global Wage Report 2020-2021 noted that over 15% of all wage employees which represent about 266m employees earned less than the minimum wage. It noted that the African continent had the highest proportion of workers 21% or 28m workers earning less than the minimum wage. While Asia and the Pacific region had the largest absolute number of people earning less than the minimum wage was estimated at 134m wage earners.
  • Japan's cabinet has approved a record $1.03trn budget draft for the next fiscal year starting in April 2021. The spending plan will be rolled out along with a third extra budget for this fiscal year as a combined 15-month budget aimed for seamless spending to ease the virus pain and back Suga's goal of achieving carbon neutrality and digital transformation.
  • The U.S. Congress approved an $892bn coronavirus aid package. The package would give $600 direct payments to individuals and boost unemployment payments by $300 a week. It also includes billions for small businesses, food assistance, vaccine distribution, transit, and health care. It also extends a moratorium on foreclosures and provides $25bn in rental aid.
  • Britain and the European Union have agreed on a new Brexit trading arrangement more than four years after the UK voted to leave the bloc, narrowly avoiding a potentially disastrous no-deal scenario. The UK government noted that it reached a "zero tariff-zero quota deal" with the EU, which will help smooth the trade of goods across the channels. A deal will bring relief to businesses on both sides that would have had to face higher costs had a deal not been reached.

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Commodities Market

Weekly Review and Outlook


  • Oil prices slumped nearly 3% on Monday as the news of the fast-spread of a new strain of coronavirus led to tighter restrictions in Britain and Europe which sparked worries about a slower recovery in fuel demand. On Tuesday, the American Petroleum Institute reported that there was a build in crude oil inventories of 2.7m barrels for the week ending December 18.
  • Oil prices rose more than 2% on Wednesday, boosted by draws in U.S. inventories of crude, gasoline, and distillates that lifted investors' hopes of fuel demand recovery. Brent had a weekly decline of -2.74% (see Table 1).


  • Gold prices depreciated by -0.47%, a reversal from gains recorded in the previous week. Silver depreciated by -1.31% W-o-W (see Table 1).


  • Cocoa prices appreciated by +1.11% this week, its first weekly growth in the past three weeks. Corn prices grew by +2.99% W-o-W while Sugar also appreciated by +3.11%  (see Table 1).

Table 1Weekly Change in Commodity Prices






Weekly Chg






































Source: Bloomberg, Proshare Research

*Data for 24th Dec, 2020 is as of 1:35 pm (Nigerian Time)



  • In the coming week, oil prices are expected to be bearish given the fast-spread of a new strain of coronavirus which has led to tighter restrictions in Britain and Europe and sparked worries about a slower recovery in fuel demand.
  • Gold prices are expected to rise as real yields continue trading in the negative territory and the imminent approval of the relief package.
  • New coronavirus strain to disrupt supply to Europe, keeping prices high
  • Higher cane output and dwindling demand to keep sugar prices low.
  • Corn prices to rise during the coming week, amidst robust demand and dry weather in South American crop areas and U.S. Midwestern area.

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Fixed Income and Money Market 


Money Market

Funding rates opened the week low as a result of system liquidity, this was despite CRR debit, system liquidity was estimated to be N334.4bn on Monday. At the close of the trading session for the week open buy back (OBB) closed at 0.43% while overnight rates closed at 0.58%.


In the coming week, we expect the funding rates to continue to trend lower barring any funding obligation.


Treasury Bills Market

Lackluster yield continued to influence the quiet trading in the Nigerian treasury bills market, average yields closed at 0.46% for the week. There was more participation in the mid and long end of the curve while the short-end of the instruments were quiet at the close of the week.


We expect participation in the NTB market to remain quiet in the coming week as a result of the depressed and unattractive yields.


FGN Bond Market

The FGN Bond Market started the week on bullish sentiments as there was more market participation at the short to mid-end of the curve on Monday, which was maintained during the week ahead of the holidays. Average yields closed the week at 3.09% with investor participation more at the long end of the curve.


We expect the market to continue in a quiet trend in the coming week. 



FGN Eurobond Market

The FGN Eurobond market started the week on bearish sentiments as average yields rose by 4bps to 5.53% on Monday, this was as a result of the new strain of COVID-19 in the UK as market participants traded with caution on the risky instrument. The FGN Eurobond market continued in its bearish bias for the rest of the week.


We expect the market participants to continue this trend on the back of sliding oil prices coupled with rising lockdowns and restrictions which will weigh on investor's optimism.


Foreign Exchange Market

For weak-on-week (W-on-W) performance of the Naira, at the I&E FX window, the Naira appreciated against the USD by +0.51%, at the BDC market it appreciated by +0.21% (as of Thursday 24 Dec 2020).


The Naira closed the week at $/N392 at the I&E FX window, at the NAFEX (spot market) it closed at $/N393.06, and at the BDC market, it closed at $/N474, Euros/N628, and Euros/N575.


We expect the CBN to continue its FX management strategy in supporting the Naira at the parallel and I & E window.

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Nigerian Capital Market

  • The Nigerian Bourse sustained a bullish momentum this week and activity in the market improved this week as investors took a position in some tier 1 banks, MTNN with a sustained interest in DANGCEM (+16.95%) which was the primary driver of the performance of the broader index during the week because they are large-cap stocks. Activity in the market was shallow on Friday as investors anticipated the Christmas break.

  • NSEASI advanced further by +5.42% to close above 38,000bpts while Market cap also advanced by N1.04trn; YTD return and market capitalization currently stand at +44.55% and N20.28trn, respectively WoW.

  • A total turnover of 2.76bn shares worth N40.34bn in 17,459 deals was traded this week by investors on the floor of the Exchange; the volume of stocks traded declined by -8.59% while value advanced by +82.58%. The most traded stocks by volume were ACCESSBANK, ZENITHBANK, and MANSARD accounting for 1.44bn shares worth N13.88bn in  2,972 deals, contributing 52.23% and 34.44% to the total equity turnover volume and value respectively.

  • Performance across sectors was broadly positive for the week, NSE-IND was the highest advancer for the week with an increase of +12.05%, NSE-30, NSE Oil & Gas and, NSE Insurance advanced this week by +4.75%, +1.38% and, +6.01% respectively. NSE Banking recorded the highest decline with -1.03% WoW.

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Chart 1: Movement of NSEASI Index Points 18Dec. 2020 - 24Dec. 2020

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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 a negative movement in NSI. The NSI and Market capitalization closed the week at 729.41 points and N523.37bn with +0.91% and -2.59% respectively. The market capitalization declined this week due to the delisting of Allianz Insurance Plc on the NASD OTC Securities Exchange on December 23, 2020.


In May 2019, the National Insurance Commission ("NAICOM") issued a circular which increased the minimum paid-up capital requirements for all insurance license classes. NAICOM's new rules have prompted players across the industry to pursue various capital raising and restructuring initiatives aimed at bridging their respective capital shortfall. According to NAICOM's circular, Allianz Nigeria Insurance Plc has a material capital shortfall of approximately N11.8 billion.


According to NASD, Allianz Nigeria's capital shortfall is unlikely to be bridged only by profit retention given the Company's profitability trend leading to shareholders' decision to delist from the exchange.


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Dangote and Toni Index 



Dangote Index closed the week positive at 129.18 basis points from 111.57 basis points recorded the previous week, an increase of +15.78% DANGCEM recorded growth in share price, DANGSUGAR decline in share price with -0.56% while NASCON  closed flat WoW. DANGCEM recorded the highest gain of +16.95% WoW.


Table 2: Dangote Index W-o-W Change

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Furthermore, the Toni Index also closed positive to close at 101.14 basis points from 99.93 basis points recorded the previous week, a W-o-W growth of +1.21%AFRIPRUD, UBA and, UBCAP  closed the week positive with +1.63%, +1.81% and, +2.15% respectively, TRANSCORP closed negative with -3.12% while TRANSCOHOT closed flat WoW.



Table 3: Toni Index W-o-W Change

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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 and market breadth remains positive in the equities market. In the short term, we expect some level of profit-taking due to investors' need to meet obligations for the yuletide season.


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