Expectations from the Markets This Week – 251021 – First Ideas Limited

Expectations from the Markets This Week – 251021

Expectations from the Markets This Week – 251021

Global Economy

  • According to officials of the Bank of Japan, the Bank would phase out the COVID-19 lending program if infections in Japan continue to decline. The program was originally slated to expire in March, and markets had anticipated a third extension. With business financial constraints easing, infection rates plummeting, and the world’s third-largest economy reopening, policymakers are now considering discontinuing the emergency program in March.
  • Data released on Friday by the Office for National Statistics shows that Retail sales in the U.K. fell by 0.2% M-o-M in September for the fifth straight month, the longest period of consecutive monthly falls since the beginning of the series in 1996.  Economists had expected retail sales to rise by 0.4% in September even though sales had fallen by an 0.6% in August. Non-food stores accounted for the monthly decrease, with sales in household goods stores falling sharply. Meanwhile, food store sales volumes rose by 0.6% following a 1.4% decrease in the previous month.
  • In its latest Investment Trends Monitor, the United Nations Conference on Trade and Development (UNCTAD) disclosed that global FDI in the first two reached an estimated $852 bn, recovering more than 70 % of the losses stemming from the COVID-19 crisis in 2020.Despite the cheering news the Monitor notes that there is a variance between the flows to developed and developing economies.  Developed economies saw the biggest rise between January and June, with FDI reaching an estimated $424bn, while FDI flows in developing economies also increased significantly, totaling $427bn.
  • During a press briefing on the October Regional Economic Outlook for sub-Saharan Africa, IMF officials stated that the recovery in sub-Saharan Africa is expected to be the slowest in the world. In a statement made available on its portal, the IMF noted that while advanced markets are expected to grow at over 5%; emerging markets and developing countries would recover at a rate of  6%, sub-Saharan Africa  is expected to grow by only  3.7 % this year, mostly due to low vaccination – which itself is due to stockpiling of vaccines by advanced economies, export restrictions by major vaccine manufacturing countries, and demands for booster shots in advanced economies.
  • According to the IMF newly released regional economic outlook Asia’s growth forecast was downgraded to 6.5 pct amid on account of a resurgence of the pandemic, initially low vaccination rates which slowed the recovery in the Asia-Pacific region, especially in emerging market and developing economies. Meanwhile, the Asia-Pacific region which remains the fastest growing region in the world is expected to grow by 4.9 percent in 2022. According to the report, China is projected to grow by 8.0 percent in 2021, while India is projected to grow by 9.5 percent also in 2021. As For advanced economies, the latest IMF forecast is broadly unchanged for 2021 with upgrades in South Korea and New Zealand, and downgrades in Japan and Australia.

Nigeria Economy

  • In its recently released “Regional Economic Outlook for October 2021” The International Monetary Fund, IMF, upwardly reviewed its forecast for Nigeria’s economic growth in 2022 and 2021 to 2.7% and 2.6% respectively. The IMF attributed the upgrade to the recovery in the country’s non-oil sectors and rising price of crude oil. The IMF had earlier in April projected that Nigeria’s economy will grow by 2.3% and 2.5% in 2022 and 2021 respectively.
  • According to data obtained from the Central Bank of Nigeria (CBN), Nigeria’s foreign reserve exceeded the $40 bn mark on 18th October 2021, after gaining $566.45 million on Monday to steady at $40.39 bn. Nigeria’s foreign reserve grew by 1.42% on Monday from $39.82 bn recorded previously. The recent gains in the country’s reserve came on the back of the $4 bn Eurobond raised by the federal government from the international debt market.
  • The umbrella body for 10 of the 11 Discos in the country- Association of Nigerian Electricity Distributors (ANED), said Discos lost up to N97bn to energy theft in Q1 2021. According to the body, the losses of power firms on account of energy theft rose by 12.79% in Q1 2021 from N86bn in Q4 2020. It also stated that 23.24% (1,831 gigawatt-hours) of the 7,880 GWh received by the Discos were lost to energy theft. Also according to official sources, the number of registered customers in the industry rose above 10 million in Q1 2021 although only 41.1 % of the customers are metered due to the historical deficit of metering.
  • At a meeting on Monday, the Senate Committee on Appropriation mandated the chairmen of standing committees to submit their budget reports latest by November 24. The Appropriation panel also released the approved timetable for the consideration of the 2022 Appropriation Bill. According to the schedule, the budget hearings and engagement with MDAs by Appropriation sub-committees will hold between October 18 and November 5, 2021, while the public hearing by the Appropriation Committee will hold on November 8 and 9, 2021. The submission and defense of budget reports by sub-committees is slated for November 10 to November 24, 2021. The consideration and passage of the 2022 Appropriation Bill by the Senate is fixed for December 15 to December 16, 2021.
  • Minister of Works and Housing, Babatunde Fashola, said at an event on Thursday that the Federal Government is currently constructing 11,000 houses nationwide (except for Lagos and Rivers where work has yet to commence). Speaking about the housing problems in the country, the Minister sustained his advocacy for the collection of monthly rents by landlords, rather than collecting rents for one, two or three years in advance.  The Minister also stressed the need to persuade governors to re-commit to housing development.

Summary and Outlook

The IMF’s “Regional Economic Outlook for October 2021,” presented earlier in the week at the sidelines of the IMF and World Bank Annual Meetings which held in Washington, projects a growth of 2.6% and 2.7% for Nigeria in 2021 and 2022 respectively. However, when contrasted with the 3% CBN growth projection for 2021, it becomes obvious that the CBN projection is considerably optimistic. Especially, given the fact that both oil and non-oil sectors have failed to record any significant improvement in actual productivity in the year. This is attributed to the level of Insecurity in the country.

A more fundamental question, however, is as it relates to the assumptions of the 2022-2024 Medium Term Fiscal Framework and Fiscal Strategy Paper (MTFF/FSP), the IMFs projection for 2022 is 1.5 percentage points lower than the Federal Government’s growth projection of 4.2 percent growth for 2022, this may call for a second look to be taken at the fundamentals of the paper.

Commodities Market

Weekly Review and Outlook



  • The Minister of State for Petroleum Resources, Chief Timipre Sylva, on Monday, inaugurated the boards of the Nigerian Midstream and Downstream Petroleum Regulatory Authority and the Nigerian Upstream Regulatory Commission in Abuja. He added that the passage of the Petroleum Industry Act repeals the DPR Act, the Petroleum Inspectorate Act, the Petroleum Equalisation Fund Act, and the PPPRA Act.
  • The Vice President of Nigeria, Prof Yemi Osinbajo, while receiving the US government delegation led by the White House Deputy National Security Advisor, Jonathan Finer, expressed concern over Development Finance Institutions (DFIs) and some countries insisting that gas projects should be defunded. He told the delegates that Nigeria has a well-designed energy transition plan.


  • Oil prices hit their highest level in years on Monday as demand recovers from the COVID-19 pandemic, enhanced by more custom from power generators turning away from expensive gas and coal to fuel oil and diesel.
  • Japanese Prime Minister, Fumio Kishida, on Monday, urged oil producers to increase output to cushion the blow to industries hit by the recent spike in energy costs.
  • China’s power crunch intensified on Monday as coal prices rose to a record high following data showing the supply of the fuel fell in September adding to concerns that domestic output may be unable to meet surging electric generation demand. On Tuesday, China’s National Development and Reform Commission expressed its readiness to bring coal prices back to a reasonable range and crackdown on any irregularities that disturb market order or malicious speculation on thermal coal futures.
  • The United Nations Environment Programme’s (UNEP) annual production gap report on Wednesday revealed that major economies had plans to produce more than double the amount of coal, oil, and gas in 2030 that is consistent with meeting climate goals set in 2015 Paris accord to curb global warming.
  • Saudi’s Energy Minister, Prince Abdulaziz bin Salman, on Wednesday, noted that boosting oil supply to the market, as requested by major oil-consuming nations, would make no significant difference on the global natural gas market.
  • India on Thursday announced a plan to maintain strategic reserves of natural gas and imported coal to address future supply shocks and mitigate the current supply deficits in the country.
  • The Russian President, Vladimir Putin on Thursday noted that Russia would supply natural gas to Europe through the Nord Stream 2 pipeline immediately after the German regulator grants its license. He blamed Europe’s gas crisis and record-high prices on the EU’s energy policy.
  • Oil prices fell on Friday with Brent poised for its first weekly dip in seven weeks as demand for oil products in power generation cooled off amid easing coal and gas prices, while a forecast for a mild U.S. winter also weighed on the market.
  • Brent had a weekly growth of 1.03% (see Table 1).


Gold appreciated by 1.66% while Silver also grew by 4.75% W-o-W (see Table 1). 


  • Cocoa prices depreciated by -0.50% this week.
  • Corn prices gained by 1.95% W-o-W while Sugar dipped by -3.64% (see Table 1).

Table 1Weekly Change in Commodity Prices

Commodity22-Oct-2115-Oct-2131-Dec-20Weekly ChgYTD Chg

Source: CNBC

*Data for 22nd October 2021 is as of 5:45pm (Nigerian Time)


  • In the coming week, oil prices are expected to rise on tight U.S. supply even as coal, gas crunch eases.
  • Gold prices are expected to be bullish in the coming week, as a weaker dollar and worries about rising inflation is expected to bolster the demand for the safe-haven asset.
  • Cocoa prices to rise in the coming week as recent dry, sunny weather is expected to improve the outlook for production in Ivory Coast.
  • Sugar prices are expected to appreciate next week recent as strength of energy prices is expected to provide some support, potentially leading to more use of cane to produce biofuel ethanol in Brazil rather than sugar.
  • Corn prices are expected to be bullish next week amid strong demand from Mexico.

Fixed Income and Money Market 

Currency Market

The Naira retraced from the record lows it hit in the previous week, appreciating for most of the trading session during the week. At the close of trading on Friday, it closed at N415.07/US$ remaining for flat on a week-on-week (W-on-W) basis both at the I & E FX Window and NAFEX window.

Average Benchmark Yields
15-Oct-202122-Oct-2021% Change
I & E FX Window415.07415.070.00
NAFEX ($/N)413.48413.480.00

Source: FMDQ

Money Market

Money market rates were elevated this week despite a robust system liquidity.

At the close of the trading on Friday, open buy-back (OBB) and overnight rates (O/N) was 19.5% and 19.25% respectively indicating a W-o-W fall of -2.56% and -3.75% for OBB and O/N.

Money Market Rate
 15-Oct-202122-Oct-2021% Change
OBB (%)19.519.00-2.56%
O/N (%)20.0019.25-3.75%

Source: FMDQ

We expect rates to hover around current levels, barring any inflows from the Apex bank.

Treasury Bills Market

The treasury bills market was mostly mixed this week, with the bears and bulls leading the market in different trading sessions.

At the close of the market on Friday, average benchmark yields for T-bills closed at 5.38%, OMO bills at 6.44%, and CBN’s special bills closed at 5.97%. Posting a W-o-W rise of +3.43% for the T-bills, while OMO bills and average yields for CBN’s special bills fell by -0.46% and -1.05% respectively.

Average Benchmark Yields
15-Oct-202122-Oct-2021% Change
T. Bills (%)5.205.38+3.43%
OMO Bills (%)6.476.44-0.46%

Source: FMDQ

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

FGN Bond Market

The bond market was bullish this week as the bulls dominated most of the trading session. At the close of trading on Friday, the trend was sustained, with selling pressure across the board.

The overall average benchmark yields closed at 8.40% at the close of trading indicating a W-on-W rise of +1.81%.

Average Benchmark Yields
15-Oct-202122-Oct-2021% Change
Short Tenor (%)5.435.64+3.87%
Mid Tenor (%)8.768.77+0.11%
Long Tenor (%)12.1712.22+0.41%

Source: FMDQ

FGN Eurobond Market

The Eurobond market continued its bearish bias this week, buoyed by the persistent uptick in the U.S 10-year treasury. 

Nigerian Capital Market

  • Activity on the local bourse this week was positive as Investors gained N169.66bn W-o-W, NGXASI Inched up by +0.78% to Close the Week Positive. Year-to-date return moderated to +3.71%, while the market capitalization settled at N21.79 trillion.
  • The volume and values of shares traded on the exchange this week dipped by -44.88% and -41.92% respectively.
  • Sectoral performance across sectors tracked was mixed this week as the NGX-IND was the highest gainer for the week with +2.59%. NGX Oil and Gas, NGX Banking closed positive with +1.40%, +0.69% while NGX Insurance and NGX Consumer Goods closed negative with a decline of -1.31% and -1.05% respectively.
  • Market breadth for the week closed negative with 34 gainers led by NGXGROUP and CUTIX as against 36 losers led by ROYALEX and UNIVINSURE.

Chart 1: Movement of NSEASI Index Points 15 Oct. 2021 – 22 Oct. 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 closed the week positive with 747.53 points representing an uptick of +0.10% while the Market capitalization closed the week positive with an uptick of +0.10% to N617.59bn.

Dangote and Elumelu Index   

Dangote Index closed the week positive with 146.63 basis points from 146.57 basis points recorded the previous week, representing a growth of +0.04%.

 DANGSUGAR recorded a growth of +1.98%, NASCON recorded a decline of -5.48% while DANGCEM remained flat W-o-W. 

Table 1: Dangote Index W-o-W Change

Company15-Oct-2122-Oct-21WoW Chg
Source: NGX,  

Furthermore, the Elumelu Index closed positive with 113.37 basis points from 113.10 basis points recorded the previous week, a W-o-W growth of +0.24%.

TRANSCORP, AFRIPRUD and UBA closed the week positive with +3.03%, +2.26%, and +1.20% while UBCAP

Table 2: Elumelu Index W-o-W Change

Company15-Oct-2122-Oct-21WoW Change
Source: NGX


In the coming week, we expect savvy investors to take positions in stocks with attractive pricing in anticipation for the earnings season. However, 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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