Weekly briefing and outlook. – First Ideas Limited

Weekly briefing and outlook.

What To Expect From The Markets This Week – 020821

Nigeria Economy

  • The Federal Government disclosed earlier in the week that the revised National Integrated Investment Masterplan (2020-2043)- a 23-year framework is meant to guide interventions, investments, and budgetary allocation to critical infrastructures such as roads, railway networks, and the maritime sector. The earlier NIIM prepared in 2012 was a 30-year plan which required N31 trillion ($100 b annually) for 30 years to close the infrastructure gap.  However, owing to the economic disruptions caused by the 2016 recession as well as the COVID-19 pandemic, the revised plan will now require $2.3tn, translating to about $150b annually to be funded by the private sector (56 %), and the Federal and State Governments (44 %).
  • Central Bank Governor, Godwin Emefiele in a press briefing following the Monetary policy committee meeting which held on the 26th and 27th, July 2021, announced that the MPC had decided to hold policy parameters, hence Monetary Policy Rate (MPR) is retained at 11.50%; Asymmetric corridor of – +100/-700bps; Cash Reserve Ratio at 27.50% and Liquidity Ratio at 30.00%. The decision to hold all policy parameters was based on expected economic growth as well as the recent inflation figure (17.75%).
  • President Muhammadu Buhari has pledged to increase Federal Government budgetary allocation to the education sector by 50% over the next two years and up to 100 percent by 2025 beyond the 20 percent global benchmark. This was part of a joint agreement among heads of state at the ongoing Global Education Summit. The summit which is being co-hosted by the Prime Minister of UK Boris Johnson and the President of Kenya Uhuru Kenyatta seeks to allow leaders to pledge to help transform education systems in up to 90 countries and territories.
  • The Nigeria Sovereign Investment Authority (NSIA) announced during the week that the Second Niger Bridge would be completed by 2022 relying on the NSIA managed Presidential Infrastructure Development Fund (PIDF), which was set up in 2018 to finalize projects that are experiencing financing delays. Other projects funded by the PIDF are the Abuja-Kaduna-Kano Expressways, Lagos-Ibadan Expressways, and the Mambilla Hydro-power project.
  • The national power grid has suffered another system collapse, worsening the blackout being experienced by households and businesses in parts of Nigeria. The grid, which is being managed by the government-owned Transmission Company of Nigeria, has continued to suffer system collapse over the years because of a lack of spinning reserve meant to forestall such occurrences. The five power stations meant to provide spinning reserves had not been doing this for years. Electricity transmission had stood at below 5,000 megawatts although Vice President, Yemi Osinbajo assured stakeholders at a conference organized by the Nigerian Association for Energy Economics (NAEE) that bottlenecks are being addressed by accelerated investment in transmission and distribution of over $3b which should increase transmission to 10GW of electricity.
  • Capital importation into Nigeria declined by -54.06% from USD1,905.89m in Q1 2021 to USD875.62m in Q2 2021. This also represents a decrease of 32.38% when compared to the second quarter of 2020. The largest amount of capital importation by type was received through portfolio investment, which accounted for 62.97% ($551.37m) of total capital importation, followed by Other Investment, which accounted for 28.13% ($246.27m) of total capital imported and then Foreign Direct Investment (FDI), which accounted for 8.90% ($77.97m) of total capital imported in Q2 2021. The United Kingdom emerged as the top origin of capital investment in Nigeria in Q2 2021 providing 35.43% of the total capital inflow in Q2 2021. In terms of the areas of Investment, Lagos state emerged as the top destination of capital investment in Nigeria in Q2 2021 accounting for 89.09% of the total capital inflow in Q2 2021. 

Global Economy

  • According to data from the Commerce Department, the US economy grew by +6.5% in the second quarter, which although is less than the +8.4% growth forecasted by Dow Jones but marks the return to an above pre-pandemic level of overall economic activity. Analysts attribute the shortfall to clogged supply chains related to the rapid reopening of the economy. Meanwhile, IMF now projects that the US economy would grow by 7.00% this year, adding 0.6 percentage points to its April projection based on positive drivers such as the over 50% level of full vaccination already achieved and government aid.
  • After its two-day meeting, the Federal Open Market Committee decided to keep the lending rate at between 0% and 0.25% until substantial further progress is observed in the levels of employment maintaining that inflation rate which is currently at a 13-year record high of 5.4% would moderate later in the year.
  • U.S. consumer confidence inched up to a 17-month high in July, with households’ spending plans rising even as concerns about higher inflation lingered, suggesting the economy maintained its strong growth clip early in the third quarter. The economy’s prospects were further brightened by other data on Tuesday showing a solid increase in new orders for manufactured capital goods in June despite supply constraints hampering production at some factories, indicating that business spending on equipment could remain strong for a while. 

Summary & Outlook

While the Federal Government announced that it was seeking about $2.3 trillion to address the national integrated infrastructure deficit, we saw a -54% reduction in capital importation in Q2 2021. Even though this drop could be partly explained by the seasonality that characterizes second quarter capital importation data, the drop still speaks to the perennial problem of inadequate soft and hard infrastructure – a sine qua non for raising investor confidence and attracting foreign investment needed for meaningful growth. Some analysts project a growth of 4.5% growth in Q2 2021 and forecast 3.22% in Q3, given the current realities with public debt servicing obligations, low tax revenue to GDP ratio, and capital importation, these forecasted growth figures appear rather optimistic. Through accommodative regulation and innovative models such as commercialization, part-divestment, securitization, and joint ventures a large amount of investment can be attracted, and sustainable growth can be achieved. 

Commodities Market

Weekly Review and Outlook



  • Dangote Refinery on Sunday said it has been awarded the National Oil Company of the year by the Nigerian Content Development and Monitoring Board.
  • OPEC on Wednesday warned Nigeria that poor investment in the oil and gas industry will have huge adverse effects on the economy as it will also in other oil-producing developing nations. The Secretary-General of OPEC, Sanusi Barkindo, also stated that Nigeria’s PIB would not only attract global attention but would also draw high-stakes investors to the country. However, the energy crisis of too little investment may hit harder on Nigeria.
  • The Federal Government through the Minister of State for Petroleum, on Thursday, said it has agreed to reduce the price of industry power gas from $2.50 to $2.18 following extensive negotiation between it and the organised labour to support the current administration’s quest for industrial revolution.


  • Oil prices fell by nearly $1 on Monday as concerns about fuel demand from the spread of COVID-19 variants, as well as floods in China, offset expectations of tight supplies through the rest of the year.
  • A former U.K.-based trader for Glencore Plc, Anthony Stimler, on Monday pleaded guilty in a Manhattan federal court over his role in a scheme that bribed officials of Nigerian National Petroleum Corporation to award oil contracts and provide more lucrative grades of oil on more favorable delivery terms for his company.
  • India has announced a move to commercialize its strategic crude oil reserves which is a sign the major Asian importer is taking steps to mitigate the high prices caused by OPEC+’s output cuts.
  • United States Government says it is considering a ban on Chinese imports of Iranian crude as it is increasingly clear that Chinese firms are the central players in the supply of Iranian oil and reaching a deal with Iran before the inauguration of its new government is unlikely.
  • The Royal Dutch Shell and an Italian energy group Eni both reported a significant increase in adjusted earnings for the second quarter of the year. Shell says it boosts dividend by 38% to 24 cents and launched a $2 billion share buyback program while Eni says it would pay 0.86 euros in dividend and launch a 400 million euro share buyback programme.
  • Oil prices record little change on Friday and headed for a weekly gain as demand grow faster than supply, while vaccinations are expected to alleviate the impact of a resurgence in COVID-19 infections across the globe.
  • Brent had a weekly growth of 3.3% (see Table 1).


Gold appreciated by 0.68% while Silver grew by 0.85%W-o-W (see Table 1).


  • Cocoa prices grew by 1.51% this week.
  • Corn prices declined by -0.50% W-o-W while Sugar dipped by -1.75% (see Table 1).

Table 1Weekly Change in Commodity Prices

Commodity30-Jul-2123-Jul-2131-Dec-20Weekly ChgYTD Chg

Source: CNBC

*Data for 30th July 2021 is as of 8:01pm (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 rise in the coming week, amid policy tightening by the U.S. Fed and the softening dollar.
  • 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 temperature plunges in Brazil reducing cane output.
  • Corn prices are expected to be bullish next week amid severe drought in the United States.

Fixed Income and Money Market 

  • Currency Market
  • The currency market was chaotic this week following the CBN’s governor’s pronouncement of the Regulator stopped the sale of FX to BDC operators at the end of the two-day MPC meeting held this week.  
  • The Naira depreciated at the BDC market while it appreciated marginally at the I & E FX window on a week-on-week (W-o-W) basis. 
  • Against the US dollar at the BDC it closed at US$/N525 depreciating by -5.00%, against the British pound it also depreciated by -1.42% to close at £/N715, and against the Euro by -1.34% to close at €/N603. 
  • At the I & E FX window, the Naira appreciated W-o-W by +0.05% and dipped by -0.02% at the NAFEX window. 
  • The Naira closed the week at $/N411.44 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.19.
 23-July-2130-July-21% Change
I & E FX Window ($/N)411.63411.44+0.05%
NAFEX ($/N)411.11411.19-0.02%
BDC ($/N)500525-5.00%
  • Source: FMDQ, AbokiFX, 
  • Money Market
  • Interbank rates fell sharply for most of the week, as over N530bn inflow from repo and primary market strengthened system liquidity.
  • At the close of the trading session on Friday, funding rates dipped. Open Buyback (OBB) closed at 7.50% while Overnight (O/N) rates closed at 7.75% indicating a W-o-W fall of -72.73% for OBB and -73.04% for O/N rates
Money Market Rate
 23-July-2130-July-21% Change
OBB (%)27.507.50-72.73%
O/N (%)28.757.75-73.04%
  • Source: FMDQ 
  • 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 largely bullish for most of the trading session this week, as we saw some buying this week.
  • At the close of the market this week, average benchmark yields for T-bills declined by -14.56% to 5.90% while OMO bills inched up by +1.38% W-o-W to close at 8.69%, CBN’s Special Bill fell by -1.44% to close at 8.23%.
Average Benchmark Yields
23-July-2130-July-21% Change
T. Bills (%)6.905.90-14.56%
OMO Bills (%)8.578.69+1.38%
  • Source: FMDQ 
  • We expect activity next week to be dictated by the market liquidity situation.  
  • The CBN sold N265.25 billion worth of notes against N216.13 billion offered at its NTB auction this week. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, and 8.20% respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper fell by 47bps.
  • FGN Bond Market
  • The Bond market sustained its bullish trend this week as positive sentiment was seen across the board.
  • The overall average benchmark yields closed at 9.25% for the week which fell W-o-W by -3.85%.
Average Benchmark Yields
23-July-2130-July-21% Change
Short Tenor (%)7.136.63-7.00%
Mid Tenor (%)10.9410.40-4.93%
Long Tenor (%)12.7712.69-0.66%
  • Source: FMDQ
  • FGN Eurobond Market
  • There was a huge sell-off of Chinese investment as a result of the crackdown by the regulators on monopolistic tendencies of tech companies in China. This sent negative sentiment to investors in emerging and frontier economies.
  • At the close of trading this week, average benchmark yields rose by +0.38% to close at 5.56% on a W-o-W basis.

Nigerian Capital Market

  • The Nigerian bourse closed the week on a negative note as the Bears dominated the market. The NGXASI closed the week with a decline of -0.31%. The Nigerian Exchange lost N62.95bn, year-to-date return moderated to -4.28%, while the market capitalization settled at N20.08trn.
  • The volume and value of stocks traded on the exchange this week advanced by +48.92% and +92.53% respectively.
  • Sectorial performance across sectors tracked was broadly negative this week as the NGX Mainboard was the highest loser for the week with -2.59% while NGX Oil and Gas recorded the highest gain with +3.84%. NGX IND, NGX-30, NGX Consumer Goods, and NGX Banking closed the week with -1.32%, -0.60%, +0.06%, and -0.95% respectively.
  • Market breadth for the week closed positive with 37 gainers led by OANDO and BOCGAS as against 35 losers led by LINKASSURE and REGALINS

  • Dangote and Toni Index   
  • Dangote Index closed the week negative with 130.93 basis points from 130.62 basis points recorded the previous week, representing a marginal rise of +0.24%.
  • DANGCEM and DANGSUGAR recorded a growth of +0.04% and +4.82% respectively while NASCON closed the week negative at a -3.67% decline W-o-W.
  • Table 2: Dangote Index W-o-W Change
Company23-Jul-2130-Jul-21WoW Chg
Source: NGX 
  • Furthermore, the Toni Index closed negative with 99.08 basis points from 99.82 basis points recorded the previous week, a W-o-W decline of -1.74%.

  • AFRIPRUD, UBA, and UBCAP closed the week negative with -7.97%, -2.56%, -4.76% TRANSCORP inched up by +8.51%  while TRANSCOHOT closed flat W-o-W. 
  • Table 3: Toni Index W-o-W Change
Company23-Jul-2130-Jul-21WoW Chg
Source: NGX
  • Outlook
  • In the coming week, we expect the possibility of bargain hunting as investors look to take advantage of the result season. However, press releases from listed companies and other macroeconomic developments are also likely to impact investors’ decisions.
  • In addition, we expect investors to monitor the movement of yields in the fixed income market.

About the Author


First Ideas Limited is an investment and financial advisory company established in 1994 to provide advisory services to high net worth individuals, trust funds, financial institutions and medium sized companies in growth sectors.

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