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Breakfast Report - 07 February 2022

On Tuesday last week, the CBN released ₦23.2 billion naira to the first beneficiaries of the 100 for 100 policy. The policy on production and productivity which was launched in October 2021 and aims to reduce over-reliance on imports, expects to increase local productivity and import substitution, whilst expanding non-oil exports and foreign exchange earning capacity. Additionally, the initiative seeks to increase employment for Nigerians by ensuring that up to 80% of the beneficiaries' employees are Nigerians. Furthermore, we believe that participants could thrive under this policy especially when the new FX bidding regime is unveiled, as manufacturers in compliance with this initiative are expected to be prioritized when importing plant and machinery. Overall whilst the policy could be beneficial in attaining the government’s long-standing plan to reduce importation, we remain wary of operational bottlenecks, poor infrastructure, and harsh economic conditions that could undermine the policy's objective.

Equity:We saw a slight recovery in the banking space on Friday, however, market traded bearish as most of the sectors closed in the red. We expect the new week to start off with mixed sentiment, amid cherry-picking activities.

Fixed Income: In the absence of significant catalysts to influence activity, we expect trading in the bonds market to remain tepid, while the NTB and OMO spaces are also likely to trade quietly ahead of the upcoming PMA.