FREE

Breakfast Report - 27 November, 2017

The Week Ahead                                                                            

In its bid to further diversify the country’s revenue sources, the Federal Government (FG) has proposed to generate ₦60 billion from duties on cigarettes & tobacco and ₦2.5 billion from additional taxes on luxury items. This was revealed by the Minister of State for Budget and Planning as part of the presentation of the 2018-2020 Medium-Term Expenditure Framework and Fiscal Strategy Paper which has now been approved by the National Assembly. We note that the 2018 Budget projects 41% higher non-oil revenues (₦4.2 trillion) in comparison to the 2017 Budget, and the FG is looking to plug this gap through additional taxes from corporates and luxury items, as well as oil asset privatization proceeds and other recoveries. Whilst we applaud efforts to reduce the country’s fiscal reliance on oil, we are cautious on the attainability of 2018 non-oil revenue targets considering the underperformance of previous years.                                                                           

A strong positive close on Friday (+185bps) lifted the NSE ASI into the green for the week after a mixed trading week (+180bps w/w). With strong positive closes across key sectors and positive market breadth at week close, we expect the healthy positive sentiment to filter into trading today.                                          

Stock Watch: UNILEVER has advanced 11% over the last four sessions and currently trades at ₦40.90, well above Vetiva target price of ₦26.10, returning 17% ytd.                                                                            

In the fixed income market, whilst we foresee demand remaining healthy in this week, sustained OMO auctions from the CBN may cap buying momentum. A ₦132 billion OMO maturity on Thursday should support liquidity and sentiment at later sessions in the week.