EUR 140.56 For Business Accounts Only

Breakfast Report - 28 November 2016

• National Bureau of Statistics released GDP by Expenditure and Income for the first half of 2016. According to the report, market price GDP contracted by -1.33% in H1’16, compared to -1.22% when measured by Output. Furthermore, Household Consumption shrank 3.61% in H1’16, with a particularly notable decline in Q2’16 (-6%) amidst a fall in real wages which eroded purchasing power. In fact, Compensation of Employees declined 14.27% y/y in H1’16 as unemployment surged to 13.3% during the period. Meanwhile, Gross Capital Formation (a measure of investment) contracted 2.25% in H1’16 as weaker confidence and a tough operating environment weighed on firms’ investment decisions. Finally, National Disposable Income rose during the period, up 9.06% y/y on the back of larger net transfers from the rest of the world.
• In addition, CBN released its Business Expectation Survey Report for Q4’16. The key takeaways are that respondent firms in all sectors of the economy are pessimistic about the fourth quarter of the year even as they expect the naira to further weaken, and inflation and borrowing costs to trend higher during the period. Also released was the Consumer Expectations Survey which showed that consumer confidence fell to -29.8 (Q4’15: -3.0), indicating a severely negative outlook. Likewise, expectations for the next quarter and next 12 months also diminished substantially.
• The Nigerian bourse traded lower last week as the ASI posted a negative weekly return of 0.8%, marking its sixth consecutive week-on-week decline. The market opened lower as lackluster Q3’16 GDP data and the MPC decision to hold rates further dampened market sentiment. At mid-week, the Index logged the sole gain of the week, snapping an eight-session losing streak as bargain hunting by investors spurred demand across select bellwether stocks believed to be oversold. The ASI however hurriedly returned to negative territory and dipped further at week close amidst fresh pressure on Industrial Goods stocks.
• We expect this week to show a see-saw trading pattern as investors seek bargains amidst the market sell off.