Breakfast Report - 13 December 2021
- According to the National Bureau of Statistics, Nigeria recorded a trade deficit of ₦3 trillion in Q3, a 62% q/q expansion and a 27% y/y increase. Despite production cuts, Crude oil topped exports while PMS dominated the import list, demonstrating an undiversified economy and a lopsided oil sector. Amid the sustained downturn in local oil production, Libya toppled Nigeria as the largest oil producer in Africa. We expect the trade deficit to worsen as oil spills and pipeline challenges impede oil production in Q4’21 amid an ever-increasing import appetite. In the medium to long term, the government's 100 for 100 policy, the Dangote oil refinery, among other initiatives, may serve as critical factors in improving Nigeria’s trade dynamics.
- Equity: With market returning to positive territory last week, activity was boosted by demand for stocks in the banking sector, particularly GTCO, Zenith, ACCESS and ETI, while broader market also had investors buy up fundamentally sound stocks with beaten down prices. We expect the ASI to inch up further at the beginning of next week amid resurgence of buy-side sentiment and portfolio rebalancing as the year draws to a close.
- Fixed Income: This week, we expect T-bills trading activity to match liquidity levels. Meanwhile the bonds market is expected to remain lukewarm as participants continue to hunt for attractive offers across the benchmark curve.
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