Market outlook – First Ideas Limited

Market outlook

 Expectations from the Markets This Week –

Summary and Outlook

The week opened on a bright note with news of accretion in the foreign reserves, helped by a rally in oil prices as well as the $3.45bn Special Drawing Rights from the IMF the country’s reserves reached $34.7bn.  Ironically, the Naira has depreciated to N525/$ in the parallel market.  Analysts are of the view that while the current accretion in the reserves (as well as the FX swap deal recently sealed) could help with short-term appreciation in the Naira against the dollar there could still be a need to address the issue of Fx liquidity in the long term. Also in the week, the Nigerian senate announced its plans to cut down on the FG planned borrowing. As of March 31, the country’s debt stocks stood at N33tr amounting to public debt to GDP of 21.13%, as the FG has concluded plans to add N5.6tn, the country’s debt profile could see a rise close to N40tr. The concern for many analysts is how the loans would be deployed and repaid. If the budget implementation report released earlier in the week is a signal to work with, we can expect that much of it would be utilized for debt service- a vicious cycle. The report shows that as of H1 2021, Debt service to revenue stood at 91% while debt servicing accounted for 35% of government spending. 

Commodities Market

Weekly Review and Outlook



  • Analysts and industry associations have decried the rising price of Liquefied Petroleum Gas (LPG), popularly called cooking gas, in the country. They attributed the rising price of cooking gas to the high cost of foreign exchange, the rising price of petroleum products in the international market, and government re-imposition of 7.5% VAT on imported LPG. They noted that about 70% of cooking gas consumed in the country is imported while NLNG supplied about 30%.
  • The NLNG in a statement released on Monday said it does not contribute to the shortfall in the supply and the hike in the price of LPG. It rather attributed the challenges to the re-imposition of VAT and forex impact. However, the statement noted that the supply of the company’s product to the domestic market is bedeviled by lack of storage capacity, poor terminal access, draft restrictions, and prioritization of other products over LPG.
  • In a figure released by the NNPC, the corporation said it incurred N756.99bn on petrol subsidy cost from January to July this year.
  • The Federal Ministry of Industry, Trade and Investment said it is pushing for an amendment of the newly passed Petroleum Industry Act (PIA) to address certain provisions which conflict with the mandate of the Weights and Measures Department of the ministry in the area of pre-shipment inspection activities at the crude oil terminals.
  • S&P Global Platts editorial on Monday stated that Nigeria’s crude output was under pressure due to operational issues and supply is at risk due to the weight of insecurity. The report added that insecurity will add to production costs and stifle investment.
  • The NNPC on Thursday stated that concerted efforts by the corporation and some federal agencies to tackle the challenge of smuggling of petroleum products have been disrupted by existing huge price differences in the pump price of petrol in Nigeria and neighboring countries.
  • The Minister of State for Petroleum Resources, Timipre Sylva, noted that he will launch the oil and gas Research and Development (R&D) Fund Utilisation Protocol, R&D 10-years Strategic Roadmap, and Technology Innovation and Incubation Centre in the coming week. An initiative of the Nigerian Content Development and Monitoring Fund (NCDMB).


  • Oil prices reversed previous gains on Monday, pulling back from more than three-week highs reached earlier in the session, as a powerful hurricane slammed into the U.S. Gulf coast, forcing shutdowns and evacuations of hundreds of offshore oil platforms.
  • A survey by Reuters shows that OPEC+ pumped more crude oil in August, the highest volume since April 2020, after the OPEC+ alliance agreed to ease the production cuts by 400,000 bpd every month beginning in August. However, outages in Nigeria and Libya limited OPEC’s supply to the market in August.
  • According to the US Department of Energy estimates, a total of 2.3 million bpd of refining capacity, or 13% of U.S. capacity, was shut in Louisiana due to Hurricane Ida while about 94% of oil and natural gas production remained suspended in the U.S. side of the Gulf of Mexico. Analysts believe power outages are likely to slow the reopening of the processing plants.
  • On Wednesday, OPEC+ agreed to continue a policy of phasing out record production reductions by adding 400,000 bpd each month to the market. The commission revised its 2022 oil demand growth forecast to 4.2 million bpd, up from a previous 3.28 million bpd.
  • Oil prices were mixed on Friday after a strong rise in the previous session on a weaker dollar and a fall in U.S. crude stocks and were set for modest weekly gains ahead of a highly anticipated U.S. monthly jobs report.
  • Both Brent and WTI benchmark oil contracts were largely steady for the week.


In the coming week, oil prices are expected to moderate further as OPEC maintains its gradual easing of oil amidst few cases of delta variant and prolong outages of power and activities in the US Gulf of Mexico and Louisiana.

Spot Prices of Commodities as of 18:12pm 03/09/2021

Commmodity03-Sep-2127-Aug-2131-Dec-20Weekly ChgYTD Chg

Source: CNBC

Fixed Income and Money Market 

 Currency Market

The Naira continued its fall against major currencies this week, both at the BDC market and official market which is majorly attributed to the scarcity of FX.

At the I & E FX window, the domestic currency appreciated slightly by -0.12% on a week-on-week (W-o-W) basis to N411.50/US$ at the close of trading on Friday.

At the BDC market, it closed at US$/N528 depreciating by +1.54% against the US dollar, against the British pound it also fell by +0.98% to close at Pound/N720, and against the Euro it fell by +2.15% to close at Euro/N619. 

The Naira closed the week at $/N411.50 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.36

Average Benchmark Yields
27-Aug-202103-Sept-2021% Change
I & E FX Window412411.50-0.12%
NAFEX ($/N)411.25411.36+0.03%
BDC ($/N)520528+1.54%

Source: FMDQ, AbokiFX,

Money Market

For most of the trading session this week, money market rates were in single digit, this was supported by robust system liquidity, the liquidity in the system was driven by multiple inflows such as the N57 billion OMO repayments, SLF inflow of N18.65 billion.

At the close of the session on Friday, funding rates increased. Open Buyback (OBB) closed at 13.00% while Overnight (O/N) rates closed at 13.50% indicating a W-o-W rise of +56.06% for OBB and +58.82% for O/N rates.

Money Market Rate
 27-Aug-202103-Sept-2021% Change
OBB (%)8.3313.00+56.06%
O/N (%)8.5013.50+58.82%

Source: FMDQ

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

Treasury Bills Market

The bills market was mixed this week, with average benchmark yields for Treasury bills declining while OMO bills inched up at the close of trading this week.

At the close of the market this week, average benchmark yields for T-bills dipped by -6.87% to 4.61%, OMO bills were up by +1.32% W-o-W to close at 6.12%.

Average Benchmark Yields
27-Aug-202103-Sept-2021% Change
T. Bills (%)4.954.61-6.87%
OMO Bills (%)6.046.12+1.32%

Source: FMDQ

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

FGN Bond Market

The FGN bond market this week was also mixed, with buying interest seen at the short and long-dated instruments, while holders of the mid-tenor notes went short.

The overall average benchmark yields closed at 8.31% for the week which fell slightly by  W-o-W by -0.84%.

Average Benchmark Yields
27-Aug-202103-Sept-2021% Change
Short Tenor (%)5.615.37-4.28%
Mid Tenor (%)9.439.62+2.01%
Long Tenor (%)11.7911.67-1.02%

Source: FMDQ

FGN Eurobond Market

The Eurobond market saw a less aggressive bullish bias on Friday, with buying concentrated at the mid to long end of the curve.  Average benchmark yields fell by 2bps to 5.68% at the close of trading.

Nigerian Capital Market

  •  The Nigerian bourse closed the week on a negative note as performance was bearish. The NGXASI closed the week with a decline of -0.57%. The Nigerian Stock Exchange lost N117.04bn, year-to-date return moderated to -2.51%, while the market capitalisation settled at N20.46 trillion.
  • The volume and value of stocks traded on the exchange this week dipped by -22.57% and -6.84% respectively.
  • Sectoral performance across sectors tracked was broadly negative this week as the NGX Insurance was the highest gainer for the week with +0.79% while NGX Oil and Gas was the highest loser with -2.96%. NGX Consumer Goods, NGX-IND, NGX Banking, closed negative with -1.34%, -0.89% and -0.58% respectively.
  • Market breadth for the week closed negative with 26 gainers led by TRANSCORP and SKYAVN as against 36 losers led by OANDO and MBENEFIT

Chart 1
: Movement of NSEASI Index Points 27 Aug. 2021 – 03 Sep. 2021

Proshare Nigeria Pvt. Ltd.Source: NSE


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 739.89 points and N643.10 with a growth of +0.48% and +0.48% respectively.

Dangote and Toni Index   

Dangote Index closed the week negative with 129.10 basis points from 131.42 basis points recorded the previous week, representing a decline of -1.76%.

 DANGCEM and DANGSUGAR recorded a decline of -1.84% and -0.56% respectively while NASCON closed flat W-o-W.

 Table 1: Dangote Index W-o-W Change

Company27-Aug-2103-Sept-21WoW Chg
Source: NGX,  

Furthermore, the Toni Index closed positive with 102.15 basis points from 98.53 basis points recorded the previous week, a W-o-W growth of +3.67%.

 AFRIPRUD, TRANSCOHOT, TRANSCORP, UBA  and UBCAP all closed the week positive.

Table 2: Elumelu Index W-o-W Change

Company27-Aug-2103-Sept-21WoW Change
Source: NGX


In the coming week, we expect the weak trend to persist, pending further corporate actions from listed companies and other macroeconomic developments are 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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