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Breakfast Report - 26 July 2021

All eyes are on the launch of the well-anticipated Central Bank Digital Currency (CBDC). According to news reports, the digital currency could be launched on October 1, following 4 years of research. Earlier in the year, the Bank issued policies to discourage the facilitation of non-regulated cryptocurrencies. However, the CBDC concept has been gaining ground due to terrorism funding possibilities under non-regulated digital assets. As the Bank rolls up its sleeves in making the digital currency available, several aspects of the payments system could be enhanced from loans to remittances. These could address the overvaluation of the Naira in the parallel market and low credit access. However, the Chinese model posits those transactions could be under the surveillance of the apex bank, strengthening the Bank’s oversight over the financial system.

Equity: Last week, the market saw increased buy-side activity and overall improvement in activity level which was driven largely by the expectation of better than expected Q2 earnings as seen in some of the early releases. We expect to see similar trading pattern going into the new week, even as we highlight the possibility of profit taking on some counters that have seen gains in recent sessions later in the week.

Stock watch: In last Friday’s session, TOTAL was a top gainer, advancing 9.96% to close at ₦203.2 and has currently gained 56.31% ytd.

Fixed Income: In the coming week, we expect the bullish sentiment to persist in the bonds market, while we foresee a quiet trading session in the NTB market as investors’ shift focus to the upcoming PMA. Finally, the OMO market is expected to trade in line with liquidity levels