Breakfast Report - 16 August 2021
Following the hammer on Bureau de Change operators, the Naira has been on our watchlist. Trading above ₦500/$, the Naira could be at the mercy of external flows for stability. Nonetheless, the absence of alternative arrangements could elevate FX pressures. Despite the weakness in the parallel market, we expect headline inflation for July to trend downwards on the back of high base effects and the reopening of the borders. While we anticipate a 17.55% y/y headline inflation print for the month of July, we do not rule out the possibility of surprises in core inflation given nascent foreign exchange pressures. Ultimately, Nigerians could brace up for slight increases in the prices of commodities restricted from official access to FX, as importers of those 43 items source dollars at a more expensive rate.
Equity: This week, we expect mixed trading with the possibility of profit-taking on some recent gainers while investors continue to anticipate audited H2 report of the Tier 1 Banking names.
Stock watch: In Friday’s session, UNILEVER was a top gainer, advancing 9.99% to close at ₦15.5. The stock has currently returned 11.87% YTD.
Fixed Income: This week, we expect the current bullish sentiment to persist in the T-bills market, as players continue to react to the PMA results, while we anticipate tepid trading in the bonds space as the upcoming DMO auction takes center stage.
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