EUR 140.56 For Business Accounts Only

Breakfast Report - 14 November 2016

• The National Bureau of Statistics (NBS) released the October 2016 Consumer Price Index and Inflation report, showing that Headline Inflation climbed to 18.3% on a year-on-year (y/y) basis, from 17.9% recorded in September. Reversing a five-month trend, month-on-month (m/m) inflation rose marginally during the month to 0.83% (September: 0.81%). Looking at the sub-Indices, Food Inflation rose to 17.1% y/y (September: 16.6%) and at a faster pace this month with m/m inflation increasing from 0.81% to 0.86% driven by persistent increase in prices of Bread and Cereal, Fish, and Meat. Meanwhile, Core Inflation rose to 18.1% y/y (September: 17.7%) but the pace of monthly inflation actually declined – to 0.75% from 0.96% in September. According to the NBS, average price of Premium Motor Spirit (PMS) in the country declined 0.3% m/m to ₦145.90/litre, though still up 56% y/y following the market liberalisation in May. Similarly, average price of Automotive Gas Oil (Diesel) fell 2.8% m/m to ₦187.25/litre. Also, after two consecutive months of declining prices, average Household Kerosene (HHK) price rose 1.4% during the month to ₦292.73/litre amidst a spike in prices in the North-East region of the country (up 14.7% m/m).
• According to the Draft National Oil Policy 2016 released by the Ministry of Petroleum Resources (MPR), the Nigerian National Petroleum Corporation (NNPC) will be broken up into five Profit Centers (PCs) and a new holding company will be incorporated as a limited liability company. This new company – to be called the National Oil Company of Nigeria (NOCN) - will function as an autonomous private entity although the government will maintain a majority stake in the company. Under the new structure, the NOCN will relinquish all regulatory capacity to the MPR.
• The equity market traded lower this past week. After opening in negative territory, losses deepened on the bourse amidst renewed pressure on cement stocks and a rout across banking stocks. However, the ASI recorded modest gains on Thursday, snapping a six-session losing streak (longest since July) following a recovery in the Financial services sector. At week close, the ASI swung into the red, extending w/w loss to four in a row.
• Notwithstanding the mixed closes across key sectors in the last session, we believe overall market sentiment remains bearish even as the ASI was on the downtrend for most part of the session. We think this could spell a bearish open in week ahead.