EUR 132.56 For Business Accounts Only

Breakfast Report - 11th July 2016

• The National Bureau of Statistics released the May Federal Accounts Allocation Report last week showing a further decline in Nigeria’s gross revenue to N289 billion (previous: N306 billion), the lowest for the year so far. This comes despite an improvement in VAT proceeds to a N65.2 billion (previous; N64.2 billion) and improvement in oil prices (Average April price: $43.34 vs Average March price: $39.79) as intermittent disruption to oil production persisted. We expect oil revenue to improve slightly in subsequent months from higher prices and recovery in production following some recent repairs.
• Meanwhile, the Central Bank of Nigeria (CBN) released a statement debunking rumors that Nigerian banks have gone or may be going into distress. The CBN highlighted that the infusion of a new board and management for Skye Bank PLC is a proactive regulatory action meant to ensure that the bank does not continue to fail in its prudential ratios. The Apex bank also highlighted that going by both its Examination Reports as well as analysis from market watchers, International Credit Rating Agencies, and Development Finance Institutions, the Nigerian banking industry remains strong in spite of the global economic challenges emanating from the collapse of global commodity prices.
• The Bears held sway on the Nigerian bourse in a two-day trading week (Tuesday to Thursday were declared public holiday by the Federal Government for the Eid al Fitr celebrations) with the Healthcare (-299bps) and Conglomerates (-727bps) sectors recording the largest declines. Overall, the NSE ASI declined 154bps w/w to put year to date return at +0.74%.
• Closing positions across most traded stocks and market indicators suggest that market sentiment remains weak. That said, we expect market to trade cautiously in the week ahead even as investors continue to weigh developments in the economic environments. Eyes will be on June inflation release this week to assess whether the upward trajectory continue. We estimate June headline inflation to print at 15.6% y/y (same as May).