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Breakfast Report - 28 February 2022

• Recently, the Statistician-General of the Federation, Simon Harry announced plans to rebase the country’s Consumer Price Index (CPI) and Gross Domestic Product (GDP). While the rebasing of the GDP would be concluded in 2023, the rebasing of the CPI could be concluded by the end of 2022. The National Bureau of Statistics would be engaging in a fresh Nigerian Living Standard Survey (NLSS) that could make the base year for the CPI series a more recent year (other than 2018/19 earlier chosen). We regard the move as timely due to the significant changes in the economy over the years. While the rebasing exercise could result in artificial improvement in key economic indicators such as debt-to-GDP and fiscal deficit-to-GDP, this is purely a statistical exercise that does not translate into better living conditions. Investors could however keep an eye on the newly rebased CPI figures to ascertain inflation-adjusted returns.

 

• Equity: We foresee a tepid session to start off the week as investors take positions in names that have seen price declines in recent sessions. Also, with the 364 days NTB currently trading sub 4.5%, this should further support buy-interest going into the new week.

 

• Fixed Income: We expect the current bullish momentum in the T-bills market to continue in the coming week as investors trade post-NTB auction sentiments. Meanwhile, activity in the bonds market is expected to slow, as players cautiously trade selected maturities in the absence of clarity on interest rate direction.