Equity Markets: Was January Extraordinary?

Proshare Nigeria Pvt. Ltd. A month ago (10 January 2022) we wrote " Beware the January rally " and pointed out that equity market rallies in January have a habit of unwinding later in the year. What do we have to say now?


Last week, the exchange rate at the Investors and Exporters Window (I&E Window) closed flat at N416.33/US$1. Elsewhere, the foreign exchange (FX) reserves of the Central Bank of Nigeria declined by 0.34% to US$39.98bn – the lowest level since October 2021 – as the CBN continues to intervene in the FX markets. Nonetheless, our view remains that the CBN’s position is strong as the level of FX reserves remains high in the long-term context. It seems likely that stability will be maintained in the I&E and NAFEX rates in the near and medium-term

Bonds & T-bills

Last week, trading in the Federal Government of Nigeria (FGN) bond secondary market was mixed with a bullish tilt as investors continued to trade cautiously over uncertainty on the direction of yields. The average benchmark yield for bonds fell by 1bp to 11.63%. The yields on the 3-year (-5bps to 8.73%), 7-year(-9bps to 11.79%) and the 10-year (-11bps to 11.98%) bonds tightened. Nevertheless, we reiterate our expectation for a rise in bond yields over the medium term owing to an expected increase in domestic borrowing by the FGN to finance the budget deficit and tight domestic monetary policy this year.

Activity in the Treasury Bill (T-Bill) secondary market was also mixed, albeit with a bearish bias, as the average benchmark yield for T-bills rose by 3bps to 4.37%. However, the yield on the 293-day T-bill fell by 1bp to close at 5.10%. At this week’s auction, the Debt Management Office (DMO) is expected to roll over N98.01bn (US$235.6m) worth of bills across the standard maturities. Elsewhere, the average yield for OMO bills expanded by 27bps to 5.48%;the yield on the 242-day OMO bill closed flat at 5.71%.


Last week, the price of Brent rose to as high as US$94.00/bbl, the highest level since 3 October 2014, before settling at US$93.27/bbl (+3.60% w/w). This marked the seventh consecutive weekly gain for the commodity. Consequently, Brent is up 19.92% year-to-date and has traded at an average of US$86.40/bbl, 21.88% higher than the average of US$70.89/bbl in 2021. Oil prices continue to be supported by expectations of global supply tightening following the […]

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