Breakfast Report - 05 June, 2017
​The World Bank released its June 2017 Global Economic Prospects report, an update from the January 2017 edition, and maintained its 2017 and 2018 global growth forecasts at 2.7% and 2.9% respectively. The forecasts are supported by strengthening industrial activity and trade, as well as improving confidence despite increasing geopolitical risks. The Bank still stressed the primary risks to their outlook as increased trade protectionism, elevated economic policy uncertainty, and the possibility of financial market disruptions. For the Sub-Saharan region, growth forecasts were revised downwards – from 2.9% to 2.6% in 2017 and 3.6% to 3.2% in 2018 – mainly on the back of weaker growth projections in South Africa. In contrast, the World Bank expects Nigeria’s economic recovery to be firmer than at the start of the year, upgrading 2017 growth forecast from 1.0% to 1.2% whilst slightly reducing 2018 growth forecast from 2.5% to 2.4%. This is predicated on the modest rebound in oil production and increased fiscal spending. The Bank views the risk to Nigeria’s growth as common across Sub-Saharan commodity exporters, highlighting weaker-than-envisioned commodity prices and the lack of implementation of reforms that are needed to maintain durable macroeconomic stability and sustain growth.
In a shortened trading week owing to Democracy Day public holiday, the Nigerian bourse closed the week 794bps up, stretching gains to eight sessions. Notably, the ASI recorded green closes every day in the trading week with all key sectors save for the Oil & Gas sector contributed to the w/w gains.
Notwithstanding the possibility of profit taking, we believe the market will record another bullish streak this week amidst sustained robust market activity and strengthened buying momentum at week close.
Stock Watch: Market leader DANGCEM hit a 2017-high of ₦192.93 on Friday. Sealing the week with a 500bps gain, the cement maker has advanced 19% over the past seven sessions and has returned 11% ytd.
In the fixed income market, we expect yields to trend further south in the bills space given the ample liquidity at week close, whilst the bond market remains relatively quiet.
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