Foreign investors’ hunt for Airtel Africa shares boosts NGX’s All Share Index


Naira records 4.6% gain w/w
Nigeria’s FX reserve drops to $40.52bn w/w

Uba Group


A review of performance of activities in the financial markets in the first week in 2022 showed that the equities market recorded gains in all trading sessions as the Naira appreciated by 4.6% in the currency market.

Meanwhile, Nigeria’s external reserve (foreign reserve) dropped by $1.78million week -on –week (w/w) to close the week at $40.52billion w/w.

The dominance of the bulls ensured the local bourse kicked off the first trading week of 2022 on a strong footing, as the benchmark index recorded gains in all trading sessions this week.

Precisely, the All-Share Index advanced by 2.7% w/w to close at 43,854.42 points. Notably, foreign investors’ demand for AIRTELAFRI (+10.0%), and bargain hunting in BUAFOODS (+9.9%), WAPCO (+7.7%), and FBNH (+4.0%) stocks spurred the weekly gain.

Accordingly, the YTD return printed +2.7%. Activity levels were strong, as trading volume and value surged by 103.7% w/w and 246.8% w/w, respectively.

However, the performances across the sectors were mixed, as the Oil and Gas (+2.7%), Banking (+0.8%), and Industrial Goods (+0.3%) indices closed positive while the Insurance (-0.9%), and Consumer Goods (-0.9%) declined.

In the near term, stock analysts believe that positioning for 2021FY dividends by investors will continue to support buying activities in the market even as institutional investors continue to search for clues on the direction of yields in the fixed income market. However, experts advise investors to take positions in only fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.

Money market

In the money market, overnight rate expanded by 425bps w/w to 14.8% this week, as funding pressures for CBN’s CRR debits and weekly OMO (N50.00 billion) and FX auctions outweighed inflows from OMO maturities (N70.00 billion).

It is expected that in the coming week, the OVN rate will trend higher as debits for CBN’s weekly auctions will likely offset the sole expected inflows from OMO maturities (N60.00 billion).

Treasury bills

Slight bullish sentiments returned to the Treasury bills secondary market on the back of declining primary market offer rates in the NTB segment and increasing bids for OMO bills. Thus, the average yield contracted by 2bps to 4.8%. Across the market segments, the average yield at the NTB segment pared by 1bps to 4.4%. Similarly, the average yield at the OMO segment declined by 1bp to 5.5%. On Thursday, the CBN sold N50.00 billion worth of bills to market participants and maintained stop rates across the three tenors, as with previous auctions.

In the coming week, “we expect the outcome of the NTB auction to shape the direction of yields in the T-bills market. The CBN is set to roll over N77.61 billion worth of maturities to market participants at the auction”, analysts at Cordros Research stated.


Trading in the Treasury bonds secondary market opened the first week of 2022 on a bearish note as investors upwardly repriced select instruments amid tepid demand. Consequently, the average yield expanded slightly by 2bps to 11.6%. Across the benchmark curve, the average yield closed higher at the short (+12bps) and long (+5bps) ends due to sell pressures on the JAN-2026 (+23bps) and APR-2049 (+40bps) bonds, respectively but declined at the mid (-3bps) segment as investors demanded the FEB-2028 (-11bps) bond.

Experts said they expect FGN bond yields to oscillate around current levels, pending clarity from the DMO regarding the execution of the FG’s domestic borrowing plan for 2022. “We believe the publication of the FGN bond issuance calendar for Q1-22 will provide the needed clarity.”

Foreign Exchange

Nigeria’s FX reserve sustained its descent, as it declined by USD1.78 million w/w to USD40.52 billion (5th January 2022). Meanwhile, the naira appreciated by 4.6% w/w to N416.00/USD at the I&E window (IEW) but depreciated by 0.9% w/w to N570.00/USD at the parallel market. In the Forwards market, the naira rate appreciated at the 1-month (+0.5% to N416.78/USD), 3-month (+0.9% to N422.70/USD), 6-month (+1.2% to N432.40/USD), and at the 1-year (+1.3% to N442.85/USD) contracts.

According to analysts at Cordros Research, the CBN has enough supply to support the FX market over the short term, given inflows from the recently issued Eurobond and the IMF’s SDR. However, they noted that foreign inflows are paramount for sustained FX liquidity over the medium term, in line with our expectation that accretion to the reserves will be weak given that crude oil production levels remain quite low. Thus, foreign portfolio investment (FPIs) which have historically supported supply levels in the IEW (53.8% of FX inflows to the IEW in 2019FY) will be needed to sustain FX liquidity levels. “Hence, we think (1) further adjustments in the NGN/USD peg closer to its fair value and (2) flexibility in the exchange rate would be significant in attracting foreign inflows back to the market,” they added.