Expectations from the Markets this week ended – First Ideas Limited

Expectations from the Markets this week ended

Expectations from the Markets this Week – 031022

Global Economy


Final GDP reading confirms US economy shrank 0.6% in Q2 2022, Analysts turn to Jobs and PMI data for cues

The Final estimate of the US’s Q2 2022 GDP growth figures released on Thursday by the Bureau of Economic Analysis, shows that the US economy shrank for the second consecutive quarter in Q2 2022. This further confirms the view held by analysts that the US economy is in a technical recession. The earlier estimate had indicated a -0.9% GDP growth in Q2.  However, gross domestic income (GDI) an alternative measure of economic growth, increased by 0.1% suggesting that the US economy remains strong. Analysts would now turn their attention to Non-Farms Payroll (NFP) data and Purchasing Managers Index (PMI) figures set for release next week to re-assess the state of the world’s largest economy.   Analysts however anticipate a slower job gain of around 250,000 in September, as against the 315,000 August print.


Amid Economic Turmoil, Revised GDP figures suggest that UK not in a recession

According to the Office for National Statistics (ONS), the UK economy grew in Q2 2022 by 0.2% which is 30bp up from a previous reading of -0.1%. This comes amid uproar that has greeted the £45bn planned tax cuts unveiled last Friday by Kwasi Kwarteng. The Chancellor of the UK treasury while presenting the government’s mini-budget to the House of Commons last week argued for a number of tax cuts and the energy bill freeze to address the country’s inflation. The world bank had   however, said that it is closely monitoring the developments in the UK and advised the country to reconsider the move which has generated concerns about the UK’s debt sustainability and which has sent the Pound sterling crashing.


Analysts forecast higher inflation in the EU, ECB to raise rates by another 75bp

The European Central Bank (ECB) is believed to be lining up another big interest rate hike when it meets in October. Analysts see the ECB responding to the obstinate surge in inflation despite a combined 125 basis points hike in rates over its last two meetings. Analysts attribute the persistent inflation in the EU to sky-high food and energy prices which have intensified price pressures. Analysts see inflation rising from 9.1% as of August to 9.7% in September. Some members of the Monetary Policy committee favor a 75 basis point hike but Analysts say a 50bp hike is the least.


Nigeria Economy


FAAC Disburses N673.137bn for August, as ECA Stagnates at $470,600

The FAAC Allocation for August came in at N673.137bn, down from the N954.08bn disbursed in July; this corresponds to a -41.7% decline. Analysts attribute the decline in August’s FAAC distribution to a drop in Companies Income Tax (CIT), Petroleum Profit Tax (PPT), Oil and Gas Royalties, counterbalancing gains in VAT, Import and Excise Duties. Meanwhile, the FAAC Allocation for August is the fourth lowest since January.


The Federation Account Allocation Committee (FAAC) has shared a total of N954.085 billion in Federation Account Revenue with the Federal Government, States, and Local Government Councils. The disbursement for August is the fourth lowest this year. This year the FAAC has disbursed a total of N6.56tr. However, the balance in the Excess Crude Account (ECA), as of September 23, stands at US$470,599.54, the same balance it maintained in July, after rising +25% from US$376,655 in June.


Analysts Remain Lukewarm as CBN’s MPC Raises Rates to Stem Inflation

After its meeting on the 26th and 27th of September 2022, ten of twelve members of the Monetary Policy Committee (MPC) voted to raise the Monetary Policy Rate (MPR) by 150 basis points in a move to mop up liquidity and combat rising inflation. The MPC raised the Cash Reserve Ratio (CRR) by 750bp to 32.5%. Inflation had accelerated aggressively by 280 basis points from 17.71% in May 2022 to 20.52% in August 2022. Analysts believe that the rise in interest rate would slow down the economy and do little to address inflation, given that the price surge is associated mainly with the devaluation of the Naira.


While the MPC intends to stem the tide of capital flow reversal by closing the interest rate spread, legacy issues would continue to deter investors. Analysts, therefore, suggest that Nigeria can conserve its FX through an import substitution policy, which would serve as a backstop in the near term. The country’s ultimate solution to worries about its FX lies in a well-implemented public asset financialization strategy which would help the country unlock liquidity from its idle public assets.


Upcoming Ehingbeti Summit: Lagos Targets $100bn in GDP 

At a stakeholder’s engagement in Lagos, ahead of the Ehingbeti Summit, the Lagos State Government stated that its 30-year development plan aims to make the State a $100bn economy by 2052. As of 2010, Lagos State’s economy was valued at $80bn, the 11th largest in Africa. To increase the volume of economic activities in the State, participants at the upcoming summit would be appraising the over 400 initiatives in the State’s development plan.


Analysts say that while the State accounts for 50% of commercial activities in Nigeria, the State’s blue economy represents a range of untapped economic opportunities.  To make meaningful progress in this regard, Analysts believe the State must work with the Federal government to develop the right policies while also addressing the rampant pollution challenge associated with the dumping of toxic wastes and the disposal of plastic.


Publishers face FX challenge, Cost of Campaign Materials to Increase

Publishers in Nigeria have said that their operations have been adversely affected by foreign exchange uncertainty and other challenges in the Nigerian business environment. According to the Managing Director of the University Press Plc, Mr. Samuel Kolawole, the trend may persist as FX illiquidity worsens going into the February 2023 elections. The cost of imported raw materials such as paper, inks, and other chemicals would also increase. Meanwhile, Analysts have noted that publishers would be ready to pass on the impact of the higher cost to consumers, which could mean that the cost of election campaign materials would increase considerably



Brent had a weekly growth of +2.67% (see Table 1).



Gold inched up by +1.43% and Silver also inched up by +2.15% W-o-W (see Table 1).



Cocoa prices inclined by +4.35% W-o-W.

Corn prices inched up by +1.44% W-o-W and Sugar prices inched up by +0.55% (see Table 1 below).


Table 1: Commodity Prices

Commodity 30-Sep-22 23-Sep-22 31-Dec-21 Weekly Chg YTD Chg
Brent 88.17 85.88 78.54 2.67% 12.26%
Gold 1679.3 1655.7 1827.1 1.43% -8.09%
Silver 19.22 18.815 23.27 2.15% -17.40%
Cocoa 2351 2253 2546 4.35% -7.66%
Corn 686.75 677 595.5 1.44% 15.32%
Sugar 18.3 18.2 18.83 0.55% -2.81%
Source: CNBC

*Data for the 30th of September 2022 is as of 05: 16 pm (Nigerian Time)


Rice Prices Stable but Increases Likely in Q4 2022

Recently, rice prices have been relatively stable because of imports from India. Although the country’s exports account for about 40% of total global export, it only exports around 15% of its production. China is the largest holder of stocks of rice, wheat, and many other agricultural commodities but has a relatively small rice export volume meaning that it does not influence international rice prices, unlike India. Stocks procured by the Indian government help keep domestic prices low. It places these stocks in its public distribution scheme, where grains and other commodities are supplied to economically disadvantaged population members at subsidized rates. African countries that import rice from India would be hurt by the move to ban the export of broken rice and the 20% level on other rice exports, as many suffer from currency devaluation and rising debt. This highlights that these countries might spend more to import the most popular staples (Rice, Corn, and Wheat), pushing them further into debt and risking higher food inflation running into 2023


Maize Farmers Claims Cast Doubt Over Success of the Anchors Borrowers Scheme (ABS)

Maize farmers in Nigeria have recounted their challenges, which made loan payments difficult. They pointed at issues ranging from the Covid-19 pandemic to floods, drought, insecurity, and late disbursement of funds. The maize association of Nigeria also weighed in, claiming some politicians used the programme to engage in politicking by creating an impression that the loans came from them and were free, which made farmers think it was a grant. No repayment was to be made, thereby making loan recovery difficult.


The Inability of Unity Bank Plc, which administered the loan, to recover the credits has forced the maize farmers association to take steps to encourage loan repayment while pointing out that the association, in conjunction with the bank, may trigger, as a last resort, the Global Standing Instruction (GSI) to get the farmers to repay. This move could jeopardize the programme’s aim, forcing farmers to fold up when they do not have the funds to continue their production.


Drafting Farmers into the Military Spells Trouble for Russia’s Grain Export 

Vladimir Putin has claimed that farmers are among those drafted into the military as part of its partial mobilization. Its bid to increase the military by 300,000 has caused protests from many Russians. Many were arrested and handed draft notices. As a neighbouring country, Finland notes, the number of eligible men leaving Russia after the draft announcement has increased. As the world’s largest wheat exporter, the effect of including farmers in the draft could be negative for countries depending on wheat exports from Russia. While winter grain planting was delayed because of rains, Russia could experience reduced planting for the winter season. Farmers drafted into the military could reduce harvests for the coming season. Countries like Nigeria that depend on Russian exports for fertilizer and wheat could be affected by this development. The countries would have to import stocks from Russia at higher prices as supply reduces and could further push food inflation upwards.


Global Grain Markets Likely to See Rising Prices as Floods and War Wipe out Farms

Pakistan, the fourth largest rice exporter, is experiencing large countrywide flooding. Less than 40% of Pakistan’s land area is arable, yet around one-third of the country’s land mass was submerged as about 3m hectares of crops have been lost, and about 33m citizens were displaced. July rainfall alone in Pakistan was 26% higher than the total annual average rainfall, and it came before the general peak period in August.


The flooding has destroyed many food crops in the country, and worries have increased as food prices have increased. Northern Nigeria has also experienced some form of flooding, and many farmers have spoken about how the flood affected rice, maize, and soybeans. The flooding came when many had already scheduled dates for harvesting their crops. This means that food prices could increase in the fourth quarter as available food prices would be expected to go up.

Ukrainian farmers have found it challenging to access farms ready for harvest, with reports noting that Russian soldiers have targeted Ukrainian grain storage and farms. Those brave enough to harvest also find it difficult to move their crops to the three key ports for grain shipments from the country. As Pakistan struggle with the flood, India’s rice export ban, and Ukraine’s Inability to ramp up harvests, we could see a rise in grain prices globally and domestically


Nigeria Loses US$2bn from the Global Shea Nut Market

The President of the National Shea Product of Nigeria said that Nigeria, particularly Niger State, loses over US$2bn of shea resources annually due to unchecked illegal export and lack of technical know-how in the shea business. Nigeria is the world’s highest producer of shea nuts but is not the largest product exporter, with neighboring Ghana having a larger market share than the country.


Data shows that Nigeria underproduces per hectare, producing less than one tonne per hectare. Illegal exports have caused severe problems for this commodity. Ghanaian traders are said to come into the country to purchase these shea nuts and then take them to their country to export without remitting any revenue. Analysts highlight that if these illegal exports continue, Nigeria could continue to experience reduced income from the commodity as countries with the machinery to boost their processing would continue to mop up some of Nigeria’s production for their country’s export


Fixed Income 


Currency Market

Following the Hawkish MPR outcome, Naira slumped to a record low of N735/US$ at the parallel market on Wednesday accompanied by a mild depreciation at the I & E and NAFEX fixings.


On Friday, it depreciated further to N745/US$ at the parallel market while the Investor and Exporter fixing followed a similar pattern, it fell by -0.16% week-on-week basis to N437.03/US$.


At the NAFEX window on Thursday, Naira depreciated to N436.78 by -0.25% week-on-week basis (see table 2 below).


Table 2: Naira/Dollar at the I&E FX Window and NAFEX Market

Average Benchmark Yields
  23-Sep-22 30-Sept-22 % Change
I&E FX 436.33 437.03  -0.16%
  22-Sep-22 29-Sept-22  
NAFEX ($/N) 435.69 436.78  -0.25%

Source: FMDQ


Money Market

Liquidity worsened this week following the rise in the Cash reserve ratio (CRR) to 32.5%. It climbed up to 16.00 at the Overnight rate (O/N) and 15.50 at the Open Repo rate (OPR) on Friday, indicating a weekly rise of +3.33% and +7.89% respectively.

(see table 3 below).


Table 3: Money Market

Money Market Rate
  23-Sep-22 30-Sept-22 % Change
OPR (%) 14.83 15.50       +3.33%
O/N (%) 15.00 16.00     +7.89%

Source: FMDQ,


Interbank rates should maintain double-digit figures next week.


Treasury Bills Market

Towards the end of the week, buying interests dominated the NTB market as the raised rate at the NTB primary auction on Wednesday enticed investors to the secondary market.


On a Week-on-week basis, the NTB closed bullish with the average benchmark yield declining by -4.03% to settle at 7.14.


The CBN OMO bills closed bearish, and the average benchmark yield rose by +11.93% to settle at 10.98 (See table 4 below).


Table 4: Treasury Bills Market

Average Benchmark Yields
  23-Sep-22 30-Sept-22 % Change
T. Bills (%) 7.44 7.14 -4.03%
OMO Bills (%) 9.81 10.98 +11.93%

Source: FMDQ


The buying interests should persist in the coming week as investors seek higher yields.



Nigerian Treasury Bill Primary Auction Result

Following the MPR hike, the Nigerian treasury bill rates soared at the primary auction yesterday. The DMO raised N179.32bn compared to the N141.34bn offered, with the oversubscription skewed to the 364-day tenor. The rates on the 91-day, 182-day, and 364-day rose significantly by 99bps, 150bps, and 225bps to settle at 6.495, 7.50%, and 12%, respectively. The bid-to-cover ratio for the three tenors was 0.20x, 0.17x, and 2.15x (see table 5 below).


Table 5: Nigerian Treasury Bills Auction Result

Nigerian Treasury Bills Auction    
 Tenor Amount offered (N’bn) Total subscription (N’bn) Amount sold


Stop Rate


Previous rate (%)



91-days         12.28 2.42 2.16 6.49 5.50
182-days         20.35 3.55 3.34 7.50 6.00
364-days         108.71 233.32 173.81 12.00 9.75

Source: Commercio paper


FGN Bond Market

Huge selloffs dominated the bond market on Friday across the three tenors, the average benchmark yield rose by 232bps (W-o-W) to settle at 13.66% (See table 6 below).


Table 6: FGN Bonds Market

Average Benchmark Yields
  23-Sep-22 30-Sep-22 % Change
Short Tenor      12.90  13.18  +2.17%
Mid Tenor      13.15 13.43  +2.13%
Long Tenor      13.83 14.19  +2.60%

Source: FMDQ


The multiple selloffs should continue next week as liquidity worsens


Analysts Fear Sterling Falling Below Parity as Tax Cuts Bite into Revenue 

The pound sterling dipped by 4.85% to a record low on Monday at US$1.03 as investors reacted to the new government’s fiscal policy. The UK Minister of Finance, Kwasi Kwarteng, has unleashed a historic tax cut requiring 72 billion pounds of government borrowing in the next six months. Investors are worried about the country’s financial burden and are pivoting to the strong dollar as a haven. The rapid decline has led to speculation that the Bank of England might intervene to support the currency. With the recent fall in the sterling, analysts fear that the currency might eventually fall below parity. Still, a hawkish policy rate may support the currency slightly.



BOE Launched a Bond-buying Programme to Stem Rising Gilt Yields 

The Bank of England launched a temporary bond-buying programme to stem the rising bond yields triggered by the release of the budget for the new tax cut policy. The BOE intends to buy £65 billion ($69 billion) of long-dated gilts to tame the spiraling bond yields and restore orderly market conditions.  On Wednesday, the BOE announced it would hold a daily reverse auction of 5 billion pounds on maturities of 20 years and above till October 14. Following the intervention, analysts noticed the yields on the selected maturities eased from the high values, the UK 30-year bond fell to 3.769 as of Friday. However, the yields of short-dated bonds are still high, the 10-year rose to 4.103 while the 2-year stayed at 4.255 as of Friday.



Equity Market

NGX – Listed Equities

  • The Nigerian bourse ended the week on a negative note as market sentiment remained negative.  The NGXASI closed the week with -0.01%loss as against -0.91% loss recorded last week. The Nigerian Exchange recorded N6.86bn gain in naira terms.
  • Year-to-date, the NGSAXI maintained its positive position to close the week with a gain +14.77%as the market capitalization settled at N26.44trn.
  • Sectoral performance across sectors was broadly negative wow. At the close of trading on Friday, four (4) sectors closed positive while eleven (11) sector closed negative and on (2) sector closed Flat. NGX INDUSTRIAL index topped the gainer’s chart with a gain of +3.01%WoW while the NGX CONSUMER GOODS Index topped the loser’s chart with a loss of -3.37% WoW (see chart 1  below).


Chart1: Movement of NGXASI Index Points 1 SEPTEMBER 2022- 30 SEPTEMBER. 2022


      Source: NGX


NASD OTC Exchange – Unlisted Equities

The NASD OTC Security Index (NSI) and Market Capitalization closed the trading week on a positive note.  The NSI and Market capitalization closed the week at 735.79 points and 968.60 with an increase of 1.69% respectively (see table 7 below).


Table 7:  NASD W-o-W Change

Parameter 23-Sep-22 30-Sep-22 WoW Chg
USI 723.56 735.79 1.69%
MKT Capitalization (Bn) 952.51 968.60 1.69%
Volume Traded 60,420.00 105,440.00 74.51%
Value Traded (000) 57,125.00 1,608,410.00 2715.60%
Deals Executed 5.00 6.00 20.00%

 Source: NGX,


Dangote And Elumelu Index

Dangote Index closed the week flat at 128.26 basis points from 128.26 basis points recorded the previous week, representing a flat share price WoW DANGCEM, NASCON, DANGSUGER remained flat WoW (see table 8 below).


Table 8: Gote Index W-o-W Change

COMPANY 23-Sep-22 30-Sep-22 % Chg
DANGCEM 245.00 245.00 0.00%
DANGSUGAR 16.05 16.05 0.00%
NASCON 11.00 11.00 0.00%

 Source: NGX,


Furthermore, the Elumelu Index closed negative at 104.56 basis points from 109.59 basis points recorded the previous week, representing a decrease of -4.59% W-o-W. UBCAP, UBA, AFRIPRUD closed the week negative with -0.45%, -3.45% and -9.91% respectively while, TRANSCORP closed the week positive with +4.76% W-o-W while TRANSCOHOT closed the week flat W-o-W (see table 9 below).

Table 9: Toni Index W-o-W Change

COMPANY 23-Sep-22 30-Sep-22 % Chg
AFRIPRUD 5.55 5.00 -9.91%
TRANSCOHOT 6.25 6.25 0.00%
TRANSCORP 1.05 1.10 4.76%
UBA 7.25 7.00 -3.45%
UBCAP 11.20 11.15 -0.45%

 Source: NGX,


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.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like these