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Breakfast Report - 17 July, 2017

The Week Ahead                                                    

The National Bureau of Statistics (NBS) released Nigeria’s June Consumer Price Index this morning. Year-on-year inflation declined from 16.3% in May to 16.1% in June, in line with Vetiva estimate but slightly ahead of Bloomberg Consensus of 16.0%. Month-on-month inflation also declined in June – falling from 1.9% in May to 1.6%, largely driven by a moderation in month-on-month Food Inflation from 2.5% to 2.0%.                    

The Nigerian equity market garnered green closes all through last week with the ASI up 247bps w/w. Profit taking pressured the Nigerian bourse at week close with the market marginally up by 4bps.                                         

With the earnings season gearing up, we expect investors to turn attention to corporate earnings releases through this week. That said, given that overall market expectation for this Q2’17 earnings season is positive, we foresee a more bullish trading bias from today.

Stock Watch: Investors reacted negatively to alleged news reports that the Securities and Exchange Commission (SEC) is investigating Oando Plc over petitions filed by foreign investors in relation to the company’s shareholding structure. The stock lost 958bps on Friday, currently trades at ₦7.55 and has returned 61% ytd.                                          

In the fixed income market, amidst pressured system liquidity, we expect trading in the T-bills market to remain mixed. Notably, at the T-bills Primary Market Auction scheduled for next week Wednesday, the CBN will be offering ₦205 billion across 91DTM, 182DTM and 364DTM bills. We also expect tepid trading to continue in the bond space even as tepid investor sentiment persists.