BusinessDay

The Week Ahead

Vehicle licences and number plates caught in inflation web

Vehicle registration in the coming weeks would be accompanied by a significant spike in prices. The Federal Government has started the implementation of newly increased rates for vehicle number plates and driving licences across the country.

The decision for the new rates was taken at the 147th meeting of the Joint Tax Board (JTB), which was held in Kaduna on March 25, 2021, where 50% and above rate increases were affected.

Read also: FRSC denies reports of new number plates, driver’s licence prices

The JTB in the new rates said that Nigerians will now pay N18,750 for standard private and commercial number plates against the old rate of N12,500, fancy number plate which was N80,000 will now cost N200,000, while motorcycle number plate which was N3,000, will now cost N5,000.

Others are, articulated number plates (three plates) will now attract N30,000, up from N20,000, out of series number plate has also been revised to N50,000 from N40,000 while government fancy number plate is N20,000 against the former N15,000 rate.

JTB in its new rate said that driving licence (three years) was raised to N10,000 from N6,000, excluding bank charges; licence for five years is N15,000 from N10,000, motorcycle/tricycle driving licence (three years) goes for N5,000 from N3,000 while the one for five years attracts N8,000 from N5,000.

 

Eko bridge axis to witness the ease of traffic on 10-week rehabilitation completion

The Federal Government revealed the re-opening of the Eko bridge on Friday, August 13, after it was closed for 10 weeks due to rehabilitation.

The Federal Controller of Works in Lagos, Olukayode Popoola, stated that traffic would also be diverted for the rehabilitation of the burnt Lagos Airport flyover from August 13.

Popoola also said traffic diversion towards the rehabilitation of the burnt Airport flyover bridge in Lagos would begin from Friday, August 13 until September 22.

The FG added that any additional work on the bridge would not require it to be closed for repairs.

He added that additional works to be carried out on the Eko bridge would not require closure, while the traffic diversion for the rehabilitation of the Airport flyover bridge would last till September 22.

NBS Economy data release calendar for the week ahead 

The NBS release calendar for the coming week indicates the following:

· Monday 16th August 2021: CPI and Inflation Report July 2021

· Tuesday 17th August 2021: Liquefied Petroleum Gas (COOKING GAS) Price Watch July 2021 & National Household Kerosene Price Watch July 2021

· Wednesday 18th August 2021: Pension Asset and Membership Data (Q2 2021) & Premium Motor Spirit (PETROL) Price Watch July 2021.

· Thursday 19th August 2021: Automotive Gas oil (DIESEL) Price Watch July 2021, Federation Account Allocation Committee (FAAC) July 2021 Disbursement & Selected Food Prices July 2021.

 

Gold suffers worst week in 2 months

Gold had its worst week in 7 weeks as the market closed bearish on Friday by 2.73%, crumbling below the $1,800 trading zone. The decline in the yellow metal came as a result of the dollar being bullish on the back of the U.S Non-farm payroll (NFP) report which reported the U.S. jobs and raised questions about the continuance of stimulus provided by the Fed to markets and the economy.

Sellers dominated the Gold market last week as bears gained more pressure on the back of the NFP report released by the U.S. The report gave strength to the U.S dollar index and this ultimately caused the sell-off in the price of Gold.

Gold traded as low as $1,759.50 on Friday but the yellow metal recovered some parts of its loss by closing the week at $1,763.10 down 2.53% for the day. Friday also represented the biggest loss the yellow metal had gotten in about 44 days when the market crashed by 4.65%. Gold appreciated by 1.05% while Silver dipped by -1.94% W-o-W.

Gold prices are expected to be mixed in the coming week, as Federal Reserve’s taper talk ebbs.

 

Oil Prices

Oil prices fell by nearly 2%, on Monday, on the back of a rising U.S. dollar and concerns that new pandemic curbs in Asia, especially China, may dampen the prospect of global recovery in fuel demand.

July fuel demand in India rebounded to its highest since April as New Delhi cleared restrictions and lockdowns, netting a 3% month-on-month increase to a total of 16.83 million tons.

U.S. investment bank Goldman Sachs lowered its oil demand forecast for China for the next two months, citing rising concerns over the impact of the next wave of COVID-19 infections.

Officers at some refineries in Asia have stated that Asian refiners demanded lower than usual volumes of crude oil from Saudi Arabia in September as authorities in China and the rest of Asia have re-imposed restrictions to fight the Delta variant surge.

OPEC on Thursday maintained its prediction of a strong recovery in world oil demand in 2021 and further growth in 2022, despite concerns about the spread of the Delta coronavirus variant that has weighed on prices. However, the Commission raised its forecast for non-OPEC members.

Oil prices fell on Friday for a second day after the International Energy Agency warned that demand growth for crude and its products had slowed sharply as surging COVID-19 cases worldwide forced governments to revive movement restrictions. Brent had a weekly growth of 0.04%.

In the coming week, oil prices are expected to hold steady as concerns about the spread of the Delta coronavirus variant is set to weigh on prices.

 

Currency Market

The Naira was bearish at the end of the week, at the BDC market, and marginally at the NAFEX window, majorly attributed to the scarcity of FX.

At the I & E FX window, the domestic currency appreciated by -0.17% on a week-on-week (W-o-W) basis to close at N410.80/US$ at the close of trading on Friday.

Against the US dollar at the BDC it closed at US$1/N513 depreciating by +0.98%, against the British pound it also appreciated by -0.71% to close at £1/N700, and against the Euro by -0.33% to close at €1/N600.

The Naira closed the week at $/N410.80 at the I&E FX window, at the NAFEX (spot market) it closed at $/N411.13.

More of the same is expected in the week ahead as the Naira is anticipated to continue to hover around N406/$1-N412/$1 threshold in the NAFEX window.

 

Money Market

Interbank rates were elevated last week, as liquidity levels remained depressed causing rates to move in double digits.

At the close of the session on Friday, funding rates dipped significantly. Open Buyback (OBB) closed at 16.75% while Overnight (O/N) rates closed at 17.25% indicating a W-o-W rise of -16.25% for OBB and -15.85% for O/N rates.

Funding rates are expected to trade in double digits trend in the coming week in the absence of any maturity.

 

Treasury Bills Market

The bills market continued its bullish trend across the board last week, as we saw some buying on all tenors through the week.

At the close of the market last week, average benchmark yields for T-bills fell by -17.05% to 4.67%, OMO bills declined up by -1.62% W-o-W to close at 7.65%, CBN’s Special Bill fell significantly by 31.14% to close at 5.66%.

The CBN sold N156.31 billion worth of notes against N51.48 billion offered at its NTB auction last week. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, and 7.35% respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper fell by 85bps.

We expect activity next week to be dictated by the market liquidity situation.

 

FGN bond and Eurobond 

The bulls continued their dominance in the FGN bond market last week as positive sentiment was seen across the board.

The overall average benchmark yields closed at 8.57% for the week which fell W-o-W by -5.40%.

Performance in the Eurobond market was mixed last week, with most of the buying concentrated at the short end of the curve. Average benchmark yields rose W-o-W by +1.14% to 5.88% on Friday.

We expect the relatively quiet trend to persist in the near term.

 

The Nigerian Capital Market

The Nigerian bourse closed the week on a positive note with some cherry-picking and bargain hunting in stocks like AIRTELAFRI. The NGXASI closed the week with a growth of +1.83%. The Nigerian Stock Exchange gained N370.75bn, year-to-date return moderated to -1.86%, while the market capitalisation settled at N20.59 trillion.

The volume and value of stocks traded on the exchange last week dipped by -66.88% and -40.98% respectively.

Sectoral performance across sectors tracked was mixed last week as the NGX Banking was the highest gainer for the week with +0.49% while NGX Oil & Gas and NGX Consumer Goods closed positive with +0.43 and +0.30% while NGX Insurance and NGX-IND declined by -2.37% and -1.37% respectively.

Market breadth for the week closed flat with 29 gainers led by HONYFLOUR and NNFM as against 29 losers led by JULI and REGALINS.

In the coming week, we expect the market to remain relatively bullish, although with some slight profit taking and bargain hunting as the half-year earnings season fades off. However, other macroeconomic developments are likely to impact investors’ decisions.

In addition, we expect investors to monitor the movement of yields in the fixed income market.

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