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Nigerian Markets Last Week: Bitcoin Briefly Above $56k, Nigeria Exits Recession

The Nigerian Markets report for the week ended February 19, 2021. It captures indexes that gauge performance across a number of financial markets in and outside the country as well as key economic indicators and events that give a glimpse into the state of the Nigerian economy.

Nigerian stocks ended the last trading session of the week on a bearish note with the benchmark index of the Nigerian Stock Exchange and Market Capitalization falling at the close of the week. 

All other indices finished lower with the exception of NSE Banking, NSE AFR Div Yield, NSE MERI Value, NSE Oil/Gas, and NSE Growth Indices which rose by 0.54%, 1.20%, 0.27%, 4.60%, and 5.43% while the NSE ASeM and NSE Sovereign Bond Indices closed flat.  (Nigerian Stock Exchange)

The February 2021 Issue of the Federal Government of Nigeria (FGN) Savings Bonds were listed on the NSE on Friday, 19 February 2021.

Also Read: Nigerian Markets Last Week: Brent Surges Above $55

At the parallel market, the exchange rate between the naira and the U.S. dollar for last week closed at ₦478/$1, a depreciation of ₦5 or 1.05% compared to the previous week’s close. Meanwhile, the naira fell by a similar margin – ₦5.33 – at the NAFEX or Importers & Exporters (I&E) Window compared to the rate in the previous week.

Bitcoin broke briefly above $56,000 on Friday with its 24-hour range between $50,821.47-$56,283.55 according to CoinDesk 20.

Ether Follows BTC’s Rally. Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Friday, trading around $1,951.37, a new all-time high. (Coindesk Market Wrap)

U.S. oil production impacted. Around 4 mb/d of U.S. oil production was sidelined due to power outages, wellhead freeze overs, and other equipment failures. Most of the outages were in the Permian Basin. Restarting frozen or shuttered wells is not necessarily straightforward, and some restarts could take weeks.

Refinery restarts could take weeks. Four of Texas’ largest oil refineries saw widespread damage from the cold snap and could take weeks to repair, according to Bloomberg. The outages could reduce demand for crude, but cut the supply of refined products. The four refineries include ExxonMobil’s Baytown and Beaumont plants, Marathon Petroleum’s Galveston Bay refinery, and Total’s Port Arthur facility. The result could be $3-per-gallon gasoline by May.

The U.S. wants to reopen talks with Iran. The U.S. government said it would accept an invitation from the EU to hold talks with Iran. Iran did not exactly jump at the news, saying it would “immediately reverse” recent actions on its nuclear program, but only after the U.S. lifted sanctions.

Saudi Arabia to increase output. Saudi Arabia is poised to reverse its 1-mb/d voluntary production cut in the coming weeks, according to the Wall Street Journal, with the returned barrels hitting the market in April. “A Saudi increase in production…makes perfect sense given the tightness that is starting to emerge in the market,” Ole Hansen, head of commodity strategy at London-based Saxo Bank, told the WSJ. “The market will probably take it quite well.”

Shell to sell Alberta assets for $900 million. Royal Dutch Shell will sell its Duvernay shale assets in Alberta for $900 million to Crescent Point Energy Corp.

Also Read: Nigerian Markets Last Week: Brent Nears $60, CBN Tightens Noose on Crypto

Maersk plans carbon-neutral shipping containers. Shipping giant A.P. Moller Maersk A/S is accelerating plans to transition to carbon-neutral operations, including plans to add the first container ship running on biofuels.

U.S. shale sticks with restraint, for now. With WTI surging to $60 per barrel, the U.S. shale industry could be in a better financial position than previously expected. Recent comments from shale executives suggest that drillers won’t return to aggressive spending plans, instead focusing on cash generation.

Canadian gas drilling on the rise. Canadian shale gas drilling has increased rapidly this year, and Canadian gas exports to the U.S. are also on the rise. Canada’s drillers are hoping to capture more market share as U.S. drillers have cut back.

Egypt to restart a second LNG plant. Egypt is close to restarting a second LNG facility after being closed for eight years. The restart boosts Egypt’s hopes of developing a major natural gas hub and LNG export industry.

Shell’s Nigerian accounts frozen in a court dispute. A Nigerian court restricted Royal Dutch Shell’s access to its bank accounts in the country over a years-long legal dispute. (Oil Price Intel)

North America rig count. U.S. Rig Count unchanged from the previous week at 397 and Canada’s went down 4 from last week to 172. (Baker Hughes Weekly Rig Count)

Also Read: Nigerian Markets Last Week: Oil Prices Rally Above $60

Economic Indicators

GDP – The Nigerian economy exited recession after Gross Domestic Product grew 0.11% in the three months through December from a year earlier, per data from the National Bureau of Statistics. For the full year 2020, the economy contracted 1.92%.

Inflation – Nigeria’s annual headline inflation increased by 16.47% in January 2020, the highest recorded in over three years and 0.71% points higher than 15.75% in the previous month.

Manufacturing –The Central Bank of Nigeria composite Purchasing Managers’ Index for the manufacturing sector fell to 49.6 points in December from 50.2 in November. That indicates a contraction, below the 50 benchmark.

Monetary Rates – as of the last CBN Monetary Policy Committee in January: Monetary Policy Rate at 11.5%; Cash Reserve Ratio at 27.5%; Asymmetric corridor of +100/-700 basis points around the MPR; Liquidity Ratio at 30%.

Foreign Reserves – The country’s gross foreign exchange reserves is currently at over $35 billion as of February 15, 2021.

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