Expectations from the Markets This Week – – First Ideas Limited

Expectations from the Markets This Week –

Expectations from the Markets This Week – 081121

Global Economy

  • Bank of England’s Monetary Policy Committee held interest rates steady on Thursday, defying many investors’ expectations that it would become the first major central bank to hike rates following the pandemic. The Committee voted 7-2 to keep its benchmark interest rate unchanged at its historic low of 0.1%, and 6-3 in favour of sustaining bond purchase programme which has a target stock of £875 billion ($1.2 trillion).
  • U.S. trade deficit reached an all-time high of $80.9 billion in September as American exports plunged 3% to $207.6 billion while imports rose 0.6% to $288.5 billion, thereby supporting deficits to top the previous record of $73.2 billion set in June. In September, petroleum exports had dropped by 15.5% due to the drilling rig and refinery shutdowns during Hurricane Ida in the Gulf of Mexico. Economists expect  the decline to reverse in coming months. Meanwhile, goods deficit with China shot up 15% in September to $36.5 billion.
  • According to latest data published by the Federal Statistics Office on Wednesday, German Factory Orders rebounded 1.3% MoM in September, falling short of early forecasts of 2%. On a yearly basis, Germany’s Factory Orders rose by 9.7% in September, suggesting that the recovery in the manufacturing sector of the European economy may be losing momentum.
  • Treasury Secretary Janet Yellen said regarding US-China Trade relations, that a reciprocal rollback of some tariffs could ease price pressures in the United States where inflation has been running at a 30-year high. Tariffs have raised prices for domestic businesses and some of the costs tend to be passed on to consumers. The US Treasury Secretary also hinted that the US expects China to fulfil its pledge to buy $200 billion in additional U.S. goods under a trade deal signed last year.

Nigeria Economy

  • Speaking at the Budget Defence, before the House Committee on Power, Minister of Power, Abubakar Aliyu highlighted obsolete equipment as the major problem affecting electricity transmission and distribution. He also noted that the unavailability of alternative sources of energy needed at generation namely: gas and hydro also represent challenges to the value chain. Meanwhile, the House Committee on Power rued the low budget performance of the N176.721bn appropriated for capital projects in the sector, out of which only N43.24bn had so far been released.
  • Kogi State governor, Yahaya Bello, presented a N145.89bn proposed budget for the 2022 fiscal year to the Kogi state house of assembly. Meanwhile, his Kano State counterpart, Dr Abdullahi Ganduje, presented a proposed budget of N196.3bn. The Kogi state proposed budget tagged ‘Budget of Accelerated Result’ is divided into recurrent expenditure of N90.1bn and capital expenditure of N55.7bn.  In the Kano State budget, capital projects represented 55 per cent of the total budget, while recurrent expenditure was 45 per cent of the budget.
  • The Governor of Niger State, Abubakar Bello, has presented the 2022 budget estimate of N198.2bn to the Niger State House of Assembly for consideration and passage.  The budget has a proposed capital expenditure of N122.9 billion (62%) and recurrent expenditure of N74.1bn (38%).
  • Appearing before the House of Representatives’ Committee on Works in Abuja on Wednesday, the Minister of Works and Housing, Babatunde Fashola, stated the need for tankers and trailers to be barred from new roads around the country. According to him, the vehicles often loaded more than the regulated capacity. Fashola also urged members of the National Assembly to agree on reducing their demands for road rehabilitation under their Zonal Intervention Programme popularly known as constituency projects, due to the limited resources at the Ministry’s disposal.
  • According to data collated from the National Bureau of Statistics, the 36 states in Nigeria and the Federal Capital Territory earned a total of N2.33tn from Pay As You Earn (PAYE) between 2018-2020.  According to the statistics office, the highest PAYE collected in the years under review was N851.73bn in 2020, up from N809.32bn in 2019 and N669.22bn in 2018. A further breakdown shows that Lagos (N788.29bn) earned the highest from PAYE in the period under review, followed by Rivers (N255.34bn) and the Federal Capital Territory (N210.08bn). Meanwhile, Jigawa (N11.74bn), Taraba (N10.66bn), and Gombe (N9.23bn) made the least from PAYE in the period under review.
  • The Nigerian Investment Promotion Commission (NIPC) announced that Nigeria attracted over $8.99 billion investment in the third quarter of 2021, this corresponds to a 127% increase on the $3.95 billion recorded in the same period of 2020.  According to the commission, Lagos state received the largest share of the investment announcement with 20 projects accounting for 81 per cent or $7.29 billion of the total, while Rivers State came second attracting $300 million worth of investments announcements and Oyo State came third with $231 million investments in electricity and trade [e-commerce). The commission also stated that the manufacturing sector topped investment announcements for the 3rd quarter of 2021 with US$8.99 billion – 42% of total investment announced.
  • Data obtained from the Federal Ministry of Power shows that Power generation in Nigeria dropped from a peak of 4,224.9MW to 3,844.3MW at the start of the week. Meanwhile, the Manufacturers Association of Nigeria has said that the high cost of alternative electricity makes Nigerian manufacturers uncompetitive within and beyond Africa. According to the body, about 45 per cent of the production cost of manufacturers in Nigeria is spent on electricity. 

Summary and Outlook

As more state governors present their proposed budgets for the 2022 fiscal, attention is being drawn to the economy at the sub-national level. Generally, there is a need to further hold the feet of sub-national governments to the fire, as the idea of a national budget includes both federal and state budgets. Given the need to invest in human capital, it is commendable that the Kano state government voted over 22% of its 196bn budget to education however the situation with insecurity needs to be addressed, being a requirement for education.

While the MPC would be expected to meet on the 21st    of November, no monetary policy changes are expected especially as inflation data billed for release on the 15th  is expected to further decline to 16.3%.

Commodities Market

Weekly Review and Outlook



  • The National Vice President of Independent Petroleum Marketers Association of Nigeria (IPMAN), Alhaji Abubakar Maigandi, on Monday, noted that there are concerns of looming fuel scarcity in the country as private depots hiked petrol price by N9 per litre from N148/lit to N157/litre, discouraging marketers from lifting the products at the depots.
  • The Nigerian National Petroleum Corporation (NNPC) on Tuesday admitted that there are pricing issues at some petrol depots in the country but ruled out any hike in the pump price of the product. The GMD of NNPC, Mele Kyari, noted that there are over 1.7 billion litres of PMS currently in the country and another 2.3 billion litres is coming in soon.
  • Nigeria’s output fell by 60,000 b/d to 1.44 million in October, just above the five-year low recorded in August. The decline led to a $158m revenue loss for Nigeria in the month.
  • President Muhammadu Buhari at the ongoing UN Climate Change Conference in Glasgow demanded for energy justice for Africa and highlighted the need to exploit the available resources as a pathway to attain net-zero emission by 2050. President Buhari noted that Nigeria is committed to net-zero emission by 2060.
  • In a report submitted by the NNPC to the Federation Account Allocation Committee, the commission said it spent a total of N864.07bn between January and September 2021 to subsidize PMS, popularly known as petrol.
  • The House of Representatives Ad hoc Committee set up to investigate the current Federal Government’s property and assets have asked the NNPC and its subsidiaries to provide a list of Federal Government’s assets under their control.
  • The Nigerian Association of Liquefied Petroleum Gas Marketers (ALPGAM) have observed that cooking gas price in Nigeria will rise further as Christmas approaches following a widening gap between supply and demand, depreciation in the value of the local currency, and new charges imposed by the government on imported gas.


  • Oil prices dropped on Monday as China’s release of gasoline and diesel reserves eased concerns over tight global supply, while investors cashed in ahead of OPEC+’s November meeting that could increase future production targets.
  • Natural gas prices surged again on Monday following several days of declines after gas flows on the Yamal-Europe pipeline from Russia reversed the direction eastward instead of westward through Germany.
  • The Chinese National Development and Reform Commission (NDRC) has revealed that the coal supply situation in the country has seen significant improvement with joint efforts from coal producers, logistics, and downstream users.
  • Analysts have observed that the controversial Russia-led natural gas pipeline Nord Stream 2 will likely get approval from German and EU regulators, but this approval could likely come too late to ease the gas shortages in Europe this winter season.
  • António Guterres, The UN Secretary-General, has said that the world’s addiction to fossil fuels is pushing humanity to the brink and recent climate action might suggest that the world is on track to turn things around, but it is an illusion. He called for maximum ambition from all countries on all fronts to make the conference successful through strong commitments.
  • OPEC and its allies (OPEC+) agreed on Thursday to stick to plans to raise oil output by 400,000 b/d, despite calls from the United States for extra supply to cool rising prices.
  • Oil prices rose on Friday after OPEC+ producers rebuffed a U.S. call to raise supply to cool the market, sticking to plans for a gradual increase in output after cuts made in the face of the coronavirus crisis.
  • Brent had a weekly decline of -2.11% (see Table 1).


Gold appreciated by 1.92% while Silver also gained by 0.63% W-o-W (see Table 1).


  • Cocoa prices depreciated by -5.15% this week.
  • Corn prices dipped by -2.16% W-o-W while Sugar gained by 1.71% (see Table 1).

Table 1Weekly Change in Commodity Prices

Commodity05-Nov-2129-Oct-2131-Dec-20Weekly ChgYTD Chg

Source: CNBC

*Data for 29th October 2021 is as of 5:27pm (Nigerian Time)


  • In the coming week, oil prices are expected to rise after OPEC+ sticks to gradual cuts.
  • Gold prices are expected to be bullish in the coming week, as central banks defer rate hikes.
  • Cocoa prices to rise in the coming week as volatility in market continues.
  • 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 as prices on world stock exchanges continue to rise.

Fixed Income and Money Market 

Currency Market

The Naira started the week on a positive note, for the most part of trading at the I & E FX window this week, it depreciated against the US Dollar.

The Naira closed at N413.3/US$ on Friday, indicating a week-on-week (W-on-W) appreciation of the Naira. At the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) window it also appreciated by -1.20%.

Average Benchmark Yields
29-Oct-202105-Nov-2021% Change
I & E FX Window415.10414.3-0.19%
NAFEX ($/N)418.6413.57-1.20%

Source: FMDQ,

Money Market

Despite a relatively stable system liquidity level, interbank rates expanded this week.

At the close of the trading on Friday, open buy-back (OBB) and overnight rates (O/N) settled at 12.00% and 12.38% respectively indicating a W-o-W fall of -36.84% and -35.69% for OBB and O/N.

Money Market Rate
 29-Oct-202105-Nov-2021% Change
OBB (%)19.0012.00-36.84%
O/N (%)19.2512.38-35.69%

Source: FMDQ

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

Treasury Bills Market

The bullish momentum at the beginning of the week was not maintained in the Nigerian Treasury Bills market.

At the close of trading on Friday, the market was bullish with selling interest seen across all maturities. Average benchmark yield for T. Bills fell by -2.71%, yields on OMO bills fell by -4.38% while yields on CBN’s special bills dipped by -9.01%

Average Benchmark Yields
29-Oct-202105-Nov-2021% Change
T. Bills (%)5.485.33-2.71%
OMO Bills (%)6.376.09-4.38%

Source: FMDQ

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

FGN Bond Market

The bond market was mixed this week as we saw selling and buying interest across maturities. At the close of trading on Friday, the trend was sustained, overall average benchmark yields closed at 8.31% at the close of trading indicating a W-on-W fall of -0.06%.

Average Benchmark Yields
29-Oct-202105-Nov-2021% Change
Short Tenor (%)5.505.33-3.12%
Mid Tenor (%)8.748.85+1.21%
Long Tenor (%)12.1112.14+0.23%

Source: FMDQ

FGN Eurobond Market

The Eurobond market was largely influenced by COVID-19 concerns and the outcome of the US Fed meeting. At the close of trading on Friday, average benchmark yields settled at 6.58%.

Nigerian Capital Market

  • Activity on the local bourse this week was choppy, as the activity of profit-takers colluded with that of bargain hunters as investors cherry-pick stocks with attractive pricing. The NGXASI closed the week with a decline of -0.06%. Investors lost N12.58bn, year-to-date return moderated to +4.33% while the market capitalization settled at N21.93trillion.
  • The volume and values of shares traded on the exchange this week dipped by -52.42% and -64.19% respectively.
  • Sectoral performance across sectors tracked was mixed this week as the NGX Insurance was the highest gainer for the week with +0.99%. NGX-IND closed positive with +0.88% while NGX Banking, NGX Oil and Gas, NGX Consumer Goods, closed negative with -1.73%, -1.63% and, -0.74%, respectively.
  • Market breadth for the week closed negative with 23 gainers led by REGALINS and MULTIVERSE as against 43 losers led by ETERNA and UNILEVER

Chart 1
: Movement of NSEASI Index Points 29 Oct. 2021 – 05 Nov. 2021

Proshare Nigeria Pvt. Ltd.

Source: NSE


The NASD OTC Security Index (NSI) and Market Capitalization closed the trading week with a negative movement in Market capitalization and NSI. The NSI closed the week negative with 745.49 points representing a downtick of -0.18% while the Market capitalization closed the week negative with a downtick of -0.18% to N615.91bn.

Dangote and Elumelu Index   

Dangote Index closed the week negative with 146.17 basis points from 146.28 basis points recorded the previous week, representing a decline of -0.07%.

DANGSUGAR recorded a decline of -1.76% while DANGCEM and NASCON remained flat W-o-W.

Table 1: Dangote Index W-o-W Change

Company29-Oct-2105-Nov-21WoW Chg
Source: NGX,  

Furthermore, the Elumelu Index closed negative with 112.63 basis points from 114.26 basis points recorded the previous week, a W-o-W decline of -1.42%.

AFRIPRUD, TRANSCOHOT and UBCAP remained flat W-o-W. TRANSCORP and UBA declined by -2.80% and -1.74% W-o-W respectively.

Table 2: Toni Index W-o-W Change

Company29-Oct-2105-Nov-21WoW Change
Source: NGX


In the coming week, we expect savvy investors to take positions in dividend paying stocks with attractive pricing as they monitor the recent earnings announcements. 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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