Breakfast Report - May 20,2019
The Week Ahead
Nigeria’s Gross Domestic Product (real GDP) grew by 2.01% y/y in the first quarter of the year, below Bloomberg Consensus estimate of 2.54%. While this figure is marginally higher than the 1.89% y/y growth recorded in Q1’18, it comes in weaker than the 2.38% y/y recorded in Q4’18. Though we had earlier expected growth in the first quarter to be mildly supported by electioneering spend, we believe a notable reason for the weaker GDP figure was the last-minute postponement of the elections which led to sizable disruption of business activities. More so, security challenges in the time period, particularly concentrated around the Northern and Niger-Delta regions also adversely impacted the business environment. While growth in the Agriculture sector strengthened to 3.17% y/y (Q4’18: 2.46% y/y), growth in the manufacturing sector slowed significantly – printing at 0.04% y/y. Growth in services also moderated in Q1’19, with GDP figure of 2.41% y/y below the 2.90% y/y recorded in Q4’18. We expect growth in the Nigerian economy to strengthen in Q2’19, as dampening effect of the election period wear out.
Equity: MTNN remains the sole market catalyst, driving market to its highest gain since 12 February 2019. We expect market to close positive today as the index continues to rally on the back of the new listing.
Stock Watch: FO led the offer cart for the second session on Friday last week, as investors continued to take profit on the rally seen on the stock from the end of April till early May. The stock closed limit down (-10.00%) to settle at ₦28.35. FO is trading 17% above its year low of ₦24.30.
Fixed Income: Given the current market liquidity, we expect activity in the T-bills space to remain positive, meanwhile, the MPC meeting will commence today. In the bond space, we expect a relatively positive session at the start of the week ahead of Wednesday’s bond auction.
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