What to Expect from the Markets this Week

The second week of February saw the CBN reporting a slowdown in private sector growth, with the PMI falling to 50.2, signalling weaker but optimistic business conditions. The National Assembly also passed the ambitious N54.99trn 2025 budget, as analysts point to historical revenue underperformance and the consequential debt burden. Meanwhile, tax reform bills advanced in the Senate, sparking debates about VAT distribution and productivity incentives over the equality of states. The naira depreciated slightly, interbank rates edged higher, and fixed-income yields dipped amid investor repositioning. Commodities saw mixed performance while the equities market posted gains amid investors' optimism. In the coming week, we expect Nigeria’s rebased CPI and GDP, the MPC rate decision, and corporate earnings releases to weigh in on market optimism.

The Nigerian Economic Dashboard @140225

Economy

CBN Report Shows Bearish PMI in January 2024

The Central Bank of Nigeria's (CBN) PMI report for January 2025 indicates a slowdown in overall private sector business conditions indicated by a Composite PMI of 50.2 from 51.3 in December 2024. The report shows a fall in activity of all sectors of the economy except Industry sector PMI at 51.3 in January 2025 from 50.0 in December 2024. The service sector was the largest hit with PMI falling to 48.6 from 52.1 in December 2024, the manufacturing sector fell to 49.3 from 49.8, agricultural sector's PMI dipped to 52.5 from 52.7. The PMI performance in January 2025 revealed lower than December 2024 overall expansion as levels of output and input orders fell. Foreign exchange remains stable between N1500 to N1600/$ in January 2025 however borrowing, cost, energy cost and insecurity posed key risks to business operational costs. We expect PMI to remain above the 50-point thresholds on FX market stability, and positive sentiments from lower inflation, though manufacturing sector conditions may remain unimpressive.

2025 Appropriation Bill Passed into Law

Nigeria's National Assembly on Thursday, February 13, 2025, passed the 2025 appropriation bill of N54.99trn into law over the N35.05trn Appropriation Act of 2024. A breakdown of the 2025 passed appropriation bill shows capital expenditure at N23.96trn, recurrent expenditure at N13.06trn, N14.31trn for debt service, and N3.65trn for statutory transfers. The 2025 spending plan initially proposed at N49.70trn was expanded to N54.23trn last week to accommodate expenditures such as Bank of Agriculture (BoA) recapitalisation (N1.5trn), Bank of Industry (BoI) recapitalisation (N500bn), solid mineral sector (N1trn), transportation (N700bn), Military Barracks infrastructure (N250bn), Critical Infrastructure (N1.5trn), Border Community infrastructure (N50bn) and Military Aviation (N120bn). The halt of aid to Nigeria by the US necessitated the expansion of the budget by N700bn ($200bn) relative to over $838.75bn aid inflow to Nigeria in 2024. The government plans to generate N4.23trn additional revenue from GOEs (N1.82trn), FIRS (N1.50trn) and NCS (N1.21trn) while concurrently expanding its expenditures to include. While we expect the ambitious bill to be sign into law as an Act by President Tinubu in the week ahead, concerns trail the government’s ability to adequately achieve revenue target, ensure improved implementation over low 2024 performance.

Tax Reform Bills Scale Second Reading

On Thursday, November 28, 2024, the Nigerian Senate passed the second reading of the Tax Reform Bills. On Wednesday, February 12, 2025, the four bills scaled second reading. These bills include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. Some key provisions of the bills have sparked controversy, particularly the proposed changes to the Value Added Tax (VAT) sharing structure, production credits for oil producers and Education tax allocation to TetFund. These bills are expected to be passed into law following the report expected of the Finance Committee.

CBN: MPC Meeting Moved by a Day, ATM Withdrawal Charges Reviewed Upwards

The Central Bank of Nigeria (CBN) announced on Monday, February 10, 2025, that it has reviewed the ATM transaction fees for ATM services to address rising operational costs and improve ATM service efficiency. A fee of N100 per N20,000 which will be effective March 1, 2025, will be applied to ATM withdrawals from banks other than a customer’s bank with a surcharge of N500 per N20,000 for off-site ATMs while all withdrawals from customers' banks (on-site and off-site) will not apply charges. The CBN's review of ATM transaction fees aims to address rising service costs and improve efficiency, which could encourage banks to deploy more ATMs and enhance service accessibility. However, the removal of free monthly withdrawals for Not-On-Us transactions and the introduction of higher off-site ATM surcharges raise concerns about increased costs for consumers, particularly low-income individuals, as this could limit their access to cash withdrawal services and worsen financial exclusion.

Table 1: Global Economic Spotlight This Week

Table 2: Global Economic Spotlight in The Week Ahead

Commodity Market

Global Commodities

As the week ended, global commodities closed the week bullish. Gold and Silver closed the week with gains amid concerns over Trump’s tariff plans. Brent and WTI also ended with gains driven by rising fuel demand and the expectation that the United States' global reciprocal tariffs would not be effective before April. Palladium rose on increased demand (See Table 3 below).

Table 3:

*Data for February 14th, 2025, is as of 05:47 pm (Nigerian Time)

Local Commodities

The AFEX commodities ended the week mixed. Maize closed the week with 6.12% as investors take position ahead of planting season. Cocoa also closed the week with gains as hotter temperatures hit West Africa. Conversely, Soybean drops on demand questions; Cashew also dipped by --0.73 % as Kogi Cashew dealers urged the government to stop foreign buyers from disrupting the cashew value chain (see table 4 below).

Table 4:

AFEX, Proshare Research *Data for February 14th, 2025, is as of 04:33 pm (Nigerian Time)

Lagos Commodities Market

Local commodities at the Lagos Commodities and Future Exchange (LCFE) remained flat for the week (see table 5 below).

LCFE, Proshare Research *Data for February 14th, 2025, is as of 05:52 pm (Nigerian Time)

Analysts expect the market to exhibit close interaction in the coming week.

Fixed Income Market

Currency Market

For the second consecutive week, the naira depreciated by 50bps week-on-week to close at N1,507.88/US$1 on Friday from N1,500.41/US$ last week (see Table 6 below).

Table 6: Naira/Dollar at NAFEM

Source: FMDQ, Proshare Research

Money Market

The OMO auction held mid-week mopped liquidity, raising interbank rates. The Open Repo Rate (OPR) and Overnight Rate (O/N) increased to 32.45% and 32.80% from 32.42% and 32.75% last week (see Table 7 below).

Table 7: Money Market

Source: FMDQ, Proshare Research

We expect rates to hover at current rates.

Nigerian Treasury Bill

The mild cherry-picking sustained a bullish trend this week. Thus, the average benchmark yield declined by 176bps (W-o-W) to 22.06% from 22.06% the previous week.

The unmet demand at the primary auction trickled into the secondary market, lowering the average benchmark yield to 26.27% (see Table 8 below).

Table 8: Average Benchmark Yields of the Treasury Bills Market

Source: FMDQ, Proshare Research

We expect mild cherry-picking.

FGN Bond Market

Despite the tight liquidity, the FGN bond market experienced mild demand, reducing the average benchmark yield by 111bps week-on-week to 19.74% Friday from 19.97% last week (see Table 9 below).

Table 9: Average Benchmark Yields of the FGN Bonds

Source: FMDQ, Proshare Research

We expect higher yields as investors become cautious, awaiting January inflation figures and MPC decisions.

Equities Market

NGX – Listed Equities

The domestic equities market sustained a bullish run, as positive sentiment amidst earning releases lifted the investors’ interest, pushing the YTD return to 4.98%. As such, the all-share index closed the second week of February bullish, up 2.00% to close at 108,03.95 points from 105,933.03 points the previous week (see chart 1 below).

Chart 1: NGX All-Share Index Trend as of February 14, 2025

While sixty-five (65) equities gained and thirty-one (31) equities posted a loss for the week, investors gained N1.83trn with market capitalisation closing at N67.42trn from N65.59trn the previous week.

The market's uptick was driven by gains in heavyweight stocks like DANGCEM (+21.83%), VFD (+30.63%), ETERNA (+22.78%), MTNN (+3.61%), and TRANSCOHOT (+9.99%), which net off the losses in BUAFOODS (-10.00), JBERGER (-8.44%), and EUNISELL (-9.7%).

The Financial Services Industry (measured by volume) led the activity chart with 1.40bn shares valued at N24.04bn traded in 31,919 deals; thus contributing 57.92% and 43.30% to the total equity turnover volume and value respectively. The Services industry followed with 247.30m shares worth N1.17bn in 6,277 deals. Third place was the Consumer Goods Industry, with a turnover of 153.78m shares worth N3.94bn in 8,405 deals.

Of the twenty-one indices under our coverage for the week, thirteen indices gained, led by the NGX Industrial Goods Index; seven lost, led by the NGX Consumer Goods Index, while the Sovereign Bond Index closed flat (see Table 10 below).

Table 10: Sectoral Index Performance as of February 14, 2025(%)

Source: NGX, Proshare Research

NASD OTC EXCHANGE – Unlisted Equities

With largely bullish momentum on the NASD unlisted OTC market through the week, the NSI gained 1.34% to close at 3,227.53 points from 3,184.87 points the previous week as market capitalisation gained 1.58% to close at N1.83trn.

The NSI uptick for the week was driven by gains in OKITIPUPA (33.10%), AFRILAND PROP (23.71%), IMPRESIT (10.00%), MIXTA (9.94%), and CSCS (2.08%), which offset the losses in FC WAMCO (-0.37%), AIRLIQ (-5.30%), GEO-FLUID (-6.61%), and UBN PROP (-7.66%) (see table 11 below).

Table 11: NASD Market Snapshot W-o-W

Source: NASD, Proshare Research

Proshare Indices

The Proshare Gote Index sustained last week’s rally on broad-based positive sentiments across its tickers; DANGCEM posted a double-digit gain, NASCON gained 2.57%, and DANGSUGAR gained 0.56%, nudging the index into the positive zone with a gain of 20.28% for the week (see Table 12 below).

Table 12: Gote Index W-o-W

The Toni index posted gains as sustained positive sentiment in AFRIPUD, TRANSPOWER, TRANSCOHOT, and TRANSCORP, outweighing the selloffs in UBA and UCAP, giving the index a net gain of -5.87% for the week (see Table 13 below).

Table 13: Toni Index W-o-W

BUAFOOD snapped its flat weekly close, dropping 10% as investors took profit in the stock, pushing the Samad Index down -7.03% for the week (see Table 14 below).

Table 14: Samad Index W-o-W

We expect the market to maintain a similar trend of bulls and bears in the coming week as investors continue to monitor earnings releases and the rebasing of the country’s macro data.