EUR 119.88 For Business Accounts Only

Breakfast Report - 27th June 2016

• Markets opened to significant sell pressure on Friday after Britain voted to leave the European Union (EU) in a 52% to 48% vote in favour of exit. The decision has set in motion an unpredictable process that threatens a period of uncertainty for Britain, Europe, and the global economy at large. Whilst trading on the Nigerian Stock Exchange was largely in the green for most part of the past week (aftermath of new FX policy), the bourse receded into negative territory at week close following the Brexit result. Notwithstanding, the NSE ASI mustered 479bps for the week, putting year to date return at 7.01%. Noting the emergence of “risk off” sentiment across global markets after the “BREXIT” decision, we expect cautious trading across market as investors seek safe havens.

• Meanwhile, Fitch Ratings has downgraded Nigeria’s Long-term foreign currency Issuer Default Rating (IDR) to “B+” from “BB-“ and Long-term local currency (IDR) to “BB-“ from “BB’ whilst maintaining a stable outlook. The agency cited worsening vulnerability in Nigeria’s Fiscal and external positions, slow monetary and fiscal adjustments to low global oil prices, lower oil production from renewed insurgency in the Niger Delta region, and magnifying pressures on export revenues amongst others.

• Whilst we highlight that the result of the Brexit referendum dampened the positive market sentiment set in by the new FX policy, we are of the opinion that the market was due for modest profit taking given recent rallies. That said, we anticipate mixed trading in the coming sessions as investors further digest the impact of the Brexit decision.