The Nigerian Markets report for the week ended February 12, 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 the NSE Growth Index which rose by 0.42% while the NSE ASeM and NSE Sovereign Bond Indices closed flat.
Sixteen (16) equities appreciated in price during the week, lower than twenty-two (22) equities in the previous week.
Fifty-five (55) equities depreciated in price, lower than sixty (60) equities in the previous week.
Ninety-one (91) equities remained unchanged, higher than eighty (80) equities recorded in the previous week. (Nigerian Stock Exchange)
At the parallel market, the exchange rate between the naira and the U.S. dollar for last week closed at ₦473/$1. Meanwhile, the naira fell at the NAFEX or Importers & Exporters (I&E) Window compared to the rate in the precious week, sparking devaluation fears.
The local unit had traded at N422/$1 earlier last week at the I&E window, with traders believing it could be a sign that the central bank is willing to accept further depreciation despite the rising price of crude oil. (Nairametrics)
Bitcoin struggle. The price of bitcoin struggled to regain $49,000 Friday, continuing to bounce between $48,000 and $46,000 heading into the weekend.
Ether reaches an all-time high. As bitcoin contemplated which way to go, ether made a new all-time high above $1,850.
Morgan Stanley to raise stake. Morgan Stanley’s $150 billion Counterpoint Global investment unit is considering placing a bet on bitcoin, according to a report by Bloomberg, which cited people familiar with the matter. (Coindesk)
Brent held above $61 per barrel in early trading on Friday, despite some headwinds from a slight strengthening of the dollar. Analysts are now split on whether or not the rally has gone too far or has more room to run.
OPEC cuts oil demand forecast. OPEC expects oil demand to rise by 5.8 million barrels per day (bpd) this year, down by around 100,000 bpd from last month’s projection due to lockdowns in major developed economies in the first half of this year, the cartel said on Thursday.
EIA: U.S. shale to grow. The EIA said that with WTI over $50, U.S. shale will return to growth later this year. The agency increased its 2022 supply forecast to 11.53 mb/d, up from 11.49 mb/d last month.
Exxon to close its Australian refinery. ExxonMobil (NYSE: XOM) said it would close its 72-year-old Altona refinery in Australia, the nation’s smallest. Once closed, Australia will only have two remaining refineries.
Goldman: Upside risk to $65 oil. A broad commodity supercycle is getting underway, creating upside risk to $65 oil, according to Goldman Sachs. “I want to be long oil and hang on for the ride,” Goldman’s Jeff Currie said in an interview with S&P Global Platts on Feb. 5, warning “there is a lot of upside here.” He added: “Is it back to $150/b? I don’t know… as it is a macro repricing we are talking about and everything needs to reprice.”
Oil majors trim shale dreams. ExxonMobil, Chevron, and BP have collectively shelved as much as 2.4 mb/d in future oil production plans from U.S. shale, according to an analysis from Energy Intelligence. The strategy overhaul means the majors will focus on cash generation rather than production growth. Excess cash flow will go to paying down debt or otherwise be returned to shareholders.
Morgan Stanley: Gasoline could become worthless. Morgan Stanley says the market may be ascribing zero or even negative value for ICE-derived revenues at GM and Ford and has listed a variety of factors that are likely to transform the companies’ once-profitable assets into potentially cash-burning and loss-making businesses.
China’s grid firms to buy 40% renewables by 2030. China will require its grid companies to purchase 40% renewable energy by 2030.
Libya’s oil port reopens. Libya’s Hariga oil port reopened after a month-long strike, which had cut output by more than half from 320,000 to 120,000 bpd.
Biden admin launches $100 million clean energy funding. The U.S. Department of Energy’s Advanced Research Projects Agency-Energy, or ARPA-E, announced $100 million in funding for low-carbon technologies. ARPA-E funds high-risk high-reward early-stage technologies. (Oil Price Intel)
North America rig count up. U.S. Rig Count rose by 5 from the previous week to 397 and Canada’s by 5 to 176. (Baker Hughes Weekly Rig Count)
GDP – The Nigerian economy is in a recession after GDP contracted for the second consecutive quarter: -3.62% in Q3 after -6.10% in Q2 2020, per data from the National Bureau of Statistics.
Inflation – Nigeria’s annual inflation rate increased by 15.75% in December 2020, the highest recorded in three years and 0.86% points higher than 14.89% 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 9, 2021.