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Breakfast Report - 18 October 2021

• In September, the National Bureau of Statistics confirmed that Nigeria experienced its sixth consecutive month of disinflation. Headline inflation fell by 38 basis points to 16.63% y/y, as a result of favourable base effects and the ongoing harvest season. While those factors also influenced a decline in food inflation to 19.57% y/y, we note that the displacement of individuals and disruption of telecommunication services in food-producing regions contributed to a rapid spike in month-on-month inflation. Core inflation, on the other hand, rose to 13.74% y/y on the back of rising energy costs and foreign exchange pressures. Going forward, we anticipate further moderation in both food and headline inflation, on the back of strong base effects and the retention of fuel subsidies.
• Equity: Last week’s activity was boosted by demand for stocks in the banking sector, particularly FBNH, while broader market also had investors buy up fundamentally sound names, thereby pushing the index up 2.90% ytd. We expect the ASI to inch up further this week amid positive market sentiment.
• Fixed Income: We expect system liquidity to dictate activity at across the T-bills space at the start of the week, while we expect bond investors to continue to trade post-auction sentiments in the coming session.