Breakfast Report - 11 October 2021
On Thursday, President Muhammadu Buhari presented the 2022 Budget
Proposal tagged the ‘Budget of Economic Growth and Sustainability’. The
₦16.4 trillion Budget represents a 26% y/y increase over the 2021 Budget
proposal. The Budget assumes an oil price benchmark of $57/barrel (2020:
$40), a daily production estimate of 1.88 million barrels (2020: 1.80 million
barrels), and an exchange rate of ₦410/$ (2020: ₦379/$). While we believe
the bright outlook for oil prices supports the revenue expectations of the
government (2022: ₦10.1 trillion), existing operational deficiencies in the oil
sector could be a cause of concern. The sustained underperformance of the oil
sector could heighten fiscal sustainability risks, following the inability of the
government to obtain an upward revision in its oil production quota.
• Equity: As expected, market was lifted by activities in the banking space with
market sentiment tilting more towards the bulls. However, we do anticipate a
mixed trading session to start the week, as investors begin profit taking
activities.
• Fixed Income: In the coming session, we anticipate a cautious start to
trading in the NTB market ahead of the PMA slated for Wednesday, while we
foresee a continuation of similar trading pattern in the bonds market.
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