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Breakfast Report - 13 January, 2020

In its recently released “Q4 2019 Consumer Expectations Survey”, the Central Bank of Nigeria (CBN) revealed that consumers have a positive outlook for the economy in 2020. The report indicated that majority of consumers anticipate a rise in the prices of goods and services in 2020, even though they expect the naira exchange rate to be stable through the year. The pressure on consumer prices could emanate from stronger demand for consumer goods like food and small household appliances, as incomes to households improve. We believe the general optimism on consumers’ finances is being driven by the upward review of the minimum wage, as well as recent CBN initiatives that are encouraging credit to the private sector. This should improve consumption in the economy, and by extension stimulate economic growth (GDP). In our opinion, the optimism expressed by consumers over the economy could come to fruition if production activity (PMI) in the country continues to improve and the CBN upholds its pro-growth monetary policy stance.

Equity: With a continued bullish performance recorded all through last week, we expect profit taking to drive the index south at week open, barring positive movements in heavyweight stocks.

Stock Watch: OKOMUOIL closed as the highest gainer, advancing 10.00% to close at ₦66.00. Just like PRESCO, the counter has experienced positive sentiment so far this year, trading at a premium of 18.71% to its year opening price of ₦55.60.

 Fixed Income: We expect demand in the T-bills market to be sustained this week, driven by anticipated NTB maturities. Meanwhile, in the bond space, we expect activity to be quiet at the start of this week, owing to planned issuances.