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Nigeria's leading finance and market intelligence news report.

WEEK AHEAD: The great Crypto sell-off, external reserves continue upward trend

THE GREAT CRYPTO SELL-OFF

The coming week would be accompanied by bearish trend in the crypto-community. The Crypto is under intense selling pressure amid the recent sell-offs in the crypto-verse, as the fast-ever-changing Crypto market lost over $200 billion in value within a few hours.

The flagship crypto was down by more than 5,000 dollars pulling back below $60,000.

The crypto market has shed much of its stellar gains earlier recorded, as significant selling pressure from crypto investors pushed the value of cryptos lower across the market spectrum amid profit-taking. The global crypto market value was thus put at $2.03 trillion, a 10.42% plunge from its previous position.

Other Crypto assets like XRP, Bitcoin Cash EOS, lost as much as 20% within a twinkle of the eyes. Market pundits argue that a likely factor for such intense drop was the relatively high funding rates for taking long positions on Bitcoin alongside a strong dark cloud built around the $64,000-$65,000 price level.

Adding credence to such bias is Cantering Clark, a popular crypto strategist, who added that recent data points to the market cooling off arbitrarily. “50k and 80k strikes highest contract/notional for $BTC I think these writers will be happy and I am still in the same opinion that the end of April – May begins the shift that makes Bitcoin a less favourable long. No breakout, just range and rotation.”

Crypto pundits are of the opinion that a market correction has long been overdue after the sudden bullish move. The bearish trend prevailing at the bitcoin market is largely attributed to a significant amount of profit-taking in play, on the account that Bitcoin’s realized profits are at record highs and is anticipated to linger in the coming week.

BEARS DOMINATE THE NSE BANKING INDEX

The NSE Banking Index traded bearish at the end of the Friday’s trading session. 6 banks posted Gains and 4 Losses were recorded. The NSE Banking Index finished red with a loss of -0.52% adding to the -0.97% held in the previous trading session. The index dropped to 343.03 index points at the close of trading activities today.

Sterling Bank posted a substantial loss of -9.76% adding to the -0.61% held at the previous trading session pushing the price downwards from N1.70 to N1.49 and leading the top losers in the NSE Banking index.

Zenith Bank also saw another loss of -1.38% adding to the -0.91% held in the previous session pushing the price from N22.00 to N21.80. Jaiz Bank lost some profit from the +6.67% held in the previous trading session by posting a loss of -1.56% settling the price at N0.63.

Fidelity Bank broke the stalemate held at the previous trading session to post a loss of -2.83% settling the price at N2.39 from N2.47. Union Bank posted profits of +2.20% to settle the price at N4.65. UBA also made gains of +2.21% pushing the price downwards to N6.95 from N6.80.

Wema Bank recovered from the decline in the previous session to post gains of (+1.79%) pushing the price to N0.58 from N0.55. GT Bank also posted a profit of +1.39% moving price from 28.75 to N29.15. Access Bank made a decisive move from its stalemate position with gains of +0.66% settling the price at N7.60. Ecobank made profits of (+1.04%) settling the price at N4.90.

Outlook for the coming week look promising as Market sentiment trends towards recovery as 6 companies in the NSE Banking Index made gains as opposed to 4 losses at the end of Friday’s trading session.

GRADUAL RECOVERY IN THE NIGERIAN STOCK EXCHANGE

The NSE is gradually recovering its lustre as the market made a recovery at the end of friday’s trading session. The All-Share Index increased by +0.61% to close at 38,808.01 from 38,571.89 index points. Nigerian Stock Exchange market value currently stands at NGN 20.32 trillion. Its Year-to-Date (YTD) returns currently stands at -3.63%. The market closed in loss as it saw more downturns, CHAMS led 21 Gainers, and JAPAULGOLD topped the 12 Losers chart with a noticeable bullish movement by the NSE ASI.

The top gainers were:

• CHAMS up +10.00% to close at N0.22
• UAC-POP up +9.72% to close at N0.76
• GUINNESS up +9.26% to close at N31.85
• NNFM up +9.18% to close at N5.35
• PZ up +8.33% to close at N4.50
While the top losers were:

• JAPAULGOLD down -10.00% to close at N0.63
• STERLNBANK down -9.78% to close at N1.48
• FCMB down -8.90% to close at N2.66
• MBENEFIT down -8.11% to close at N0.34
• ACCESS down -6.17% to close at N7.60
However, in the coming week, the following stocks should remain on investors’ watchlist: Zenith Bank Plc, Guaranty, Access bank, STANBIC, JAPAULGOLD, GUINNESS and Flour Mills.

Read Also: Oil has best week since early March on improving demand outlook

RECOVERY HOPE LOOMS HIGH DESPITE OIL PRICE NUDGE

Oil settled modestly lower on Friday but secured a weekly gain on a stronger demand outlook and signs of economic recovery in China and the United States that offset concerns about rising COVID-19 infections in other major economies.

Brent crude settled down 17 cents, or 0.3%, at $66.77 a barrel. The global benchmark finished up 6% on the week after rising in the past four sessions. U.S. West Texas Intermediate (WTI) crude settled down 33 cents, or 0.5%, at$63.13.

In the previous week, both the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) increased their forecasts for oil demand growth for 2021, citing the stronger-than-expected rebound in activity in certain economies. Those forecasts were also supported by Wednesday’s government data that showed overall U.S. crude inventories fell by 5.9 million barrels as refining activity picked up.

Oil has recovered from pandemic-induced lows last year, helped by record cuts to oil output by OPEC and its allies, a group known as OPEC+ and this trend is anticipated to continue in the coming week.

Some of the OPEC+ cuts will be eased starting in May, and the group meets on April 28 to consider further tweaks to the supply pact.

NAIRA FLUCTUATES AROUND THE N400/$1 THRESHOLD

Naira depreciated against the US Dollar at the Investors and Exporters window on Friday to close at N411.00 to a dollar. This was a 0.12% drop from the rate that was recorded on Thursday, 15th April 2021.

The opening indicative rate closed at N411.00 to a dollar on Friday. This represents an 0.12% drop when compared to N410.13/$1 recorded on Thursday.

Also, an exchange rate of N437.62 to a dollar was the highest rate recorded during intra-day trading before it closed at N411.00/$1. It also sold for as low as N393/$1 during intra-day trading. Forex daily turnover at the Investor and Exporters (I&E) window closed at 61.52% on Friday, 16th April 2021.

More of the same is expected as the Naira is anticipated to continue its trend around the N400/$1 threshold in the coming week.

EXTERNAL RESERVE BOOST CONTINUES

Nigeria’s external reserve gained about $27 million on Wednesday, 14th April 2021 to close at $35.199 billion, being the highest external reserve position recorded in over a month.This indicates a 0.08% increase when compared to $35.172 billion recorded on Tuesday, 13th April 2021. It also represents an increase in the country’s external reserve position for the 17th consecutive day, having endured a significant downturn earlier in the year. Nigeria’s reserve has added a total of about $783 million in 17 days.

This recent increase in Nigeria’s external reserve could however be attributed to the increase in crude oil prices recorded earlier in March before the recent bearish trade in the crude market.

It could be attributed to the possible increase in diaspora remittance as the CBN offers incentives for every unit of a dollar received in Nigeria from diaspora remittance.

In the coming week, the external reserve is likely to get a further boost, as the Federal Government recently announced plans to issue $500 million Eurobonds for 2021.

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