Expectations From The Markets This Week – 221121 – First Ideas Limited

Expectations From The Markets This Week – 221121

Expectations From The Markets This Week – 221121

Global Economy

  • Federal Reserve officials said on Tuesday they are concerned about the possible impact of higher inflation on U.S. households, dampening consumer sentiment and want to get it under control. Richmond Fed President Thomas Barkin noted that consumer sentiment could be approaching a level that similar to the recession. Meanwhile, US retail sales rose by +1.7% in October, defying the moderate projection of 1.4% which was based on spiraling inflation.
  • Japan’s Ministry of Finance announced on Wednesday, that the country’s export rose +9.4% year-on-year falling slightly below a median market forecast for a 9.9% increase in a poll. It follows a 13.0% growth recorded in the prior month. Meanwhile, the country’s export growth fell lower than the double-digit expansion seen in the preceding seven months. The slowing growth in Japan’s exports in October was due to slowing U.S. and China-bound car shipments. Supply chain bottlenecks have been particularly disruptive for the car industry and have clouded the outlook for overseas demand.
  • U.S. House of Representatives passed a landmark $1.85 trillion social spending and climate bill on Friday, forwarding the bill, which is a pivot of the administration’s economic agenda, to the Senate. The bill which is also referred to as the Build-Back-Better bill, is meant to provide child-care, education, health care, protection for the environment amongst other monumental policy advances. The passage of the bill comes on the heels of the signing of the $1tr infrastructure bill by the US President.

Nigeria Economy

  • Minister of Works and Housing, Mr. Babatunde Fashola (SAN), said on Thursday that in just over a week after launching the National Housing Programme, a total of 7, 315 applications have been received for housing units provided under the Housing Programme. This exceeds the 5000 units available by 2315 units. To qualify for allocation of the housing units, Fashola stated certain requirements that need to be met by applicants namely: provision of current tax clearance, payment slip, and means of identification.
  • According to Data from the National Bureau of Statistics, Nigeria recorded a 4.03% real GDP growth in the third quarter of the year after growing by 5.01% in Q2 2021.  At the press briefing that preceded the release of the report, the Bureau identified the base effect of the low GDP recorded in Q2 and Q3 2020 as the major contributors to the growth in GDP in Q3 2021.
  • The Bauchi State Governor, Bala Mohammed, has presented a N195.36bn budget – “Budget of consolidation and continuous commitment– for the 2022 fiscal year. The budget allocates N84.74bn (43 per cent) to recurrent expenditure and for capital expenditure- N110.62bn (57 per cent) was provided. Mohammed said that the budget would be financed by N107.041bn recurrent revenue, made up of internally generated revenue of N24.49bn, statutory allocation of N66.94bn and VAT of N15.61bn.
  • CPI data released by the NBS suggests that the Headline(general) inflation came in at 15.99%, 63.1bp lower than the 16.63% recorded last month. Meanwhile, m-o-m the headline index rose by 0.98%. Meanwhile, the food sub-index saw an inflation of 18.34% y-o-y. As for the core-sub index, an inflation of 13.24% was recorded y-o-y. The Urban Index increased by 16.52% while the Rural Index recorded a rise of 15.48%.
  • In its ‘Where to Invest in Africa 2021’ report Rand Merchant Bank listed Egypt as the top investment destination in Africa. While Morocco and South Africa came in second and third places, respectively. Rwanda and Botswana also moved up the rankings coming in at fourth and fifth, respectively. According to the Bank, Operating environments, fiscal scores and development plans were the basis of the ranking. Disturbingly, Nigeria did not make the list while Ghana ranked sixth.

Summary and Outlook

In the week, the National Bureau of Statistics released data on Nigeria’s real GDP growth and Inflation. The release of the two lagging macroeconomic indicators sets the tone for deliberations at the forthcoming Monetary Policy Committee meeting which would hold between the 21st-22nd of November 2021. Real GDP grew by +4.03% in the third quarter largely on the back of a 49.65% contribution from the services sector, where financial and Insurance services recovering from a -2.48% contraction in Q2, to grow y-o-y by +23.23%. Notably, Oil production dropped from 1.61mbpd in Q2 to1.57mbpd in the third quarter, resulting in a -10.56% decline in the output from the Mining Sector. Although, still being supported by the low base effect, the growth figures as well as those of Inflation which declined in October by 63basis points to 15.99% would disincline the MPC from altering its centrist stance.

Commodities Market

Weekly Review and Outlook



  • Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) on Monday issued a two-week strike notice to the Federal Government, citing the need to attend to oil workers’ welfare.
  • Stakeholders in the oil and gas industry have stated that weak fiscal environment and decades of poor investment in the sector might undermine the prospects of the sector under the new Petroleum Industry Act (PIA).
  • The GMD of NNPC, Mele Kyari, on Tuesday, stated that Nigeria and most OPEC+ members would face challenge to pump more oil if OPEC agreed to do so. He stated that financing to ramp up production is lacking.
  • A report released by the NBS shows that the average price paid by consumers for petrol increased by 2.75% year-on-year to N165.60 in October 2021 from N161.17 in October 2020. States with the highest average price of petrol are Plateau (N172.43), Nasarawa (N170.45), and Abia (N170.25), while states with the lowest average price of petrol are Yobe (N159.86), Kwara (N160) and Lagos (N162.67).
  • The African Export-Import Bank (Afreximbank) has signed a $US1.04 billion facility with the Nigerian National Petroleum Corporation (NNPC) to finance the exploration of petroleum in Nigeria. The agreement was concluded on Wednesday in Durban during the second intra-Africa trade fair.
  • The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said crude oil production in the country declined to an average of 1.6 million b/d in 2021 on the back of theft and insecurity, among other factors.
  • Nigeria oil marketers on Thursday warned that the rising cost of petrol at depots would warrant a corresponding increase in pump price if the situation were not addressed. 


  • Crude oil prices fell on Monday, under pressure from expectations of increasing supplies and a lower demand forecast amid higher energy costs.
  • According to data from German network operator-Gascade, gas flows from Russia to Germany via the Yamal-Europe pipeline increased with no signs of being impacted by a political standoff between Belarus and the European Union.
  • A recent report by the University of Sussex and 6 climate change institutions found that five wealthy nations-the United States, Canada, Norway, Australia, and the United Kingdom plan to expand the production of fossil fuels. Whereas coal, oil, and gas production must fall globally by 69%, 31%, and 28% respectively between now and 2030 to achieve the 1.5ºC target, the 5 nations plan to reduce coal production by only 30% and increase oil and gas production by 33% and 27%, respectively.
  • A source at Morocco’s ONHYM has confirmed to S&P Global Platts that the government of Morocco is considering setting up a downstream division of the state-owned ONHYM to manage domestic natural gas infrastructure, which include a project to deliver gas by pipeline from Nigeria to Morocco through 13 countries.
  • The COP26 climate change summit ended with a not too significant deal due to pressure from major coal consumers. The conference ended with the Glasgow Climate Pact, which includes stipulations for reducing subsidies for oil and gas, the phasing-down of coal consumption, and stipulation on increasing financial support for developing country Parties beyond the $100 billion per year of the Paris Agreement.
  • Germany’s energy regulator said it has suspended the approval process for Nord Stream 2, a pipeline supplying Russian gas to Europe. This throws up a new roadblock to the contentious project and drive-up regional gas prices.
  • India on Wednesday stepped up efforts to combat high levels of pollution in New Delhi that threaten the lives of residents and others nearby, ordering a temporary halt to operations of five power stations and longer school closures.
  • Some environmental organizations in South Africa (SA) are suing the government of SA for its decision to build 1.5 gigawatts (GW) of new coal-fired power generation capacity, saying more coal poses significant unjustifiable threats to South Africans.
  • Oil prices rose on Friday, after wild swings the day before, on investor concerns that potential coordinated releases by the world’s major economies of their official crude reserves to try to lower prices may have less of an impact than expected.
  • Brent had a weekly decline of -5.09% (see Table 1).


Gold depreciated by -0.22% while Silver also dipped by -1.38% W-o-W (see Table 1).


  • Cocoa prices appreciated by 2.38% this week.
  • Corn prices dropped by -0.26% W-o-W while Sugar gained by 0.50% (see Table 1).

Table 1Weekly Change in Commodity Prices

Commodity19-Nov-2112-Nov-2131-Dec-20Weekly ChgYTD Chg

Source: CNBC

*Data for 19th November 2021 is as of 6:01pm (Nigerian Time)


  • In the coming week, oil prices are expected to be bearish on resurgent pandemic in Europe.
  • Gold prices are expected to appreciate in the coming week, as inflation worries, Europe COVID-19 curbs spur safety demand.
  • Cocoa prices are expected to be mixed in the coming week as growing expectations for a second bumper harvest in main growers Ivory Coast and Ghana will likely weigh on prices.
  • Sugar prices are expected to appreciate next week on tight global supply.
  • Corn prices are expected to be dip marginally next week as U.S. Department of Agriculture raises corn yield.

Fixed Income and Money Market 

Currency Market

The Naira started the week on a quiet note, closing flat at against the US dollar for most of the trading session at the I & E FX window.

The Naira closed at N414.10/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 depreciated by -0.17%.

Average Benchmark Yields
12-Nov-202119-Nov-2021% Change
I & E FX Window415.10414.4-0.17%
NAFEX ($/N)413.79413.09-0.17%

Source: FMDQ

Money Market

System liquidity was relatively elevated for most of the week, but rates traded at double-digit trend.

At the close of the trading on Friday, open buy-back (OBB) and overnight rates (O/N) settled at 19.00% and 20.00% respectively indicating a W-o-W rise of +31.03% and +31.15% for OBB and O/N.

Money Market Rate
 12-Nov-202119-Nov-2021% Change
OBB (%)14.5019.00+31.03%
O/N (%)15.2520.00+31.15%

Source: FMDQ

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

Treasury Bills Market

The treasury bills market started the week on a quiet note, but activity picked up later into the mid-week.

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 -1.62%, yields on OMO bills fell by -2.48% while yields on CBN’s special bills dipped by -1.02%

Average Benchmark Yields
12-Nov-202119-Nov-2021% Change
T. Bills (%)5.195.11-1.62%
OMO Bills (%)5.625.48-2.48%

Source: FMDQ

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

FGN Bond Market

The local bond market sustained a mixed sentiment this week, with most of the selling concentrated at the mid end of the curve.

At the close of trading on Friday, the market closed on a mixed note. Overall average benchmark yields closed at 8.44% indicating a W-on-W rise of +1.53%.

Average Benchmark Yields
12-Nov-202119-Nov-2021% Change
Short Tenor (%)5.275.37+1.90%
Mid Tenor (%)8.888.85-0.33%
Long Tenor (%)12.1612.24+0.64%

Source: FMDQ

FGN Eurobond Market

The Eurobond market started the week on a relatively bullish note, as attractive yield levels trigger some interests which was not sustained throughout the week.

At the close of trading on Friday, average benchmark yields settled at 6.69% indicating a W-on-W increase of +1.36%.

Nigerian Capital Market

  • Activity on the local bourse this week was bearish with sell pressure seen across several stocks. The NGXASI dipped by -0.12%. Investors lost N28.05bn, year-to-date return moderated to +7.27%, while the market capitalization settled at N22.54trillion.
  • The volume of shares traded on the exchange this week dipped by -5.37% while the values of shares advanced by 33.17%.
  • Sectoral performance across sectors tracked was bearish this week as all sectors closed negative. NGX-IND, NGX Insurance, NGX Consumer Goods, NGX Banking, and NGX Oil & Gas closed negative with -0.10%, -0.47%, -1.41% and, -1.60% and -3.63% respectively.
  • Market breadth for the week closed negative with 15 gainers led by VITAFOAM and ETRANZACT as against 49 losers led by CUTIX and  NGXGROUP.

Chart 1: Movement of NSEASI Index Points 12 Nov. 2021- 19 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 positive with 745.65 points representing a downtick of -1.52% while the Market capitalization closed the week positive with a downtick of -1.52% to N616.04bn.

Dangote and Elumelu Index   

Dangote Index closed the week negative with 146.17 basis points from 146.27 basis points recorded the previous week, representing a decline of -0.07%.

DANGSUGAR recorded a decline of -1.75%, while DANGCEM and NASCON remained flat W-o-W.

Table 1: Dangote Index W-o-W Change

Company11-Nov-2119-Nov-21WoW Chg
Source: NGX,  

Furthermore, the Elumelu Index closed negative with 110.30 basis points from 112.91 basis points recorded the previous week, a W-o-W decline of -2.31%.

 TRANSCORP and UBA declined by -3.85% and -2.96% while AFRIPRUD, TRANSCOHOT and UBCAP  remained flat W-o-W. 

Table 2: Elumelu Index W-o-W Change

Company11-Nov-2119-Nov-21WoW Change
Source: NGX


In the coming week, we expect the activities of profit takers to collude with bargain hunters on the bourse. 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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