EUR 138.52 For Business Accounts Only

Breakfast Report - 23 January 2017

• During the past week, the National Assembly passed the 2017-2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Plan (FSP). Whilst all other estimates were left unchanged, the initial oil benchmark price of $42.50 per bbl was revised upward to $44.50 per bbl likely due to expected higher oil prices during the year following the OPEC production cut deal. Meanwhile, the Vice-President, Prof. Yemi Osinbajo at the World Economy Forum disclosed that the Federal Government plans to launch the Economic Recovery Plan in February. We see this as a positive particularly as the President of the African Development Bank, Akinwumi Adesina hinged the release of the second tranche of the $1 billion loan on the launch of the plan.
• The International Monetary Fund (IMF) released its January 2017 World Economic Outlook, leaving global GDP growth forecast for 2017 unchanged at 3.4% from the October 2016 projection. However, 2017 forecast for Advanced economies was increased to 1.9% (October 2016: 1.8%) on the back of stronger growth expectations for U.S. (2.2% to 2.3%), Japan (0.6% to 0.8%), and United Kingdom (1.1% to 1.5%). Although 2017 forecast for Sub-Saharan countries was downgraded from 2.9% to 2.8%, Nigeria’s growth forecast was increased to 0.8% (October 2016: 0.6%). The IMF also expects average global oil prices to trend around $62.60 per bbl ($20 per barrel higher than average 2016 levels).
• The Nigerian bourse traded mixed with a bearish bias in the past week as the ASI shed 39bps w/w and stretched its ytd loss to 242bps. At week open, the NSE ASI eked out mild gains largely on the back of strong performance across banking stocks. Afterwards, the market lingered in the red as the overall bearish trading sentiment weighed in. At week close, the NSE ASI swung into the green amidst pocket of gains across board. Notably, the Consumer Goods sector notched its maiden gain of the year following thirteen consecutive sessions of sell-offs.
• Following Friday’s turnaround in the Consumer Goods sector, we anticipate further bargain hunting in the sector. Coupled with fairly sustained appeal for banking stocks, we expect the market to trade higher this week.