EUR 88.38 For Business Accounts Only

Breakfast Report - 29 August 2016

• According to the CBN Q2’16 Economic report, Federal Government (FG) revenue for the second quarter came in higher at ₦677.9 billion (Q1: ₦505.1 billion) as increased Independent revenues and VAT receipts compensated for a 28% drop in Federation Account revenue during the quarter. Second quarter expenditure also came in higher, hitting a record high of ₦1,768.9 billion (Q1: ₦1,230.3 billion) amidst increases in both recurrent and capital expenditure. In summary, H1 gross revenue and expenditure were ₦1,183 billion and ₦2,999 billion respectively, putting FG deficit at ₦1,816 billion, already 83% of FY budget deficit estimate for 2016, suggesting FG may likely overshoot the deficit target for the year.
• CBN data showed that foreign exchange inflow through the CBN into the economy rose 48% q/q to $5.89 billion whilst foreign exchange outflow rose 4.1% q/q to $6.09 billion, resulting in a net outflow of $0.20 billion (Q1: $1.87 billion). This is down from $1.22 billion, the corresponding figure in 2015. Meanwhile, non-oil export earnings dropped to $0.58 billion (Q1: $1.02 billion) on the back of lower manufactured and food product exports.
• The Nigerian bourse opened the past week on a bullish note with all key sectors closing in the green for the first three sessions. This trend was bucked on Thursday as the ASI recorded sharp losses following declines in a number of bellwether stocks. Although, the market rebounded on Friday amidst gains in Industrials, Thursday’s losses outweighed the previous days’ gains as the NSE ASI posted week on week loss of 72bps; Year to date loss now stands at 4.2%.
• Going into this week, key data releases (including Q2 GDP and July Inflation) by the NBS should dictate the NSE ASI direction. We estimate Q2 GDP of -2.9% which should officially put Nigeria in recession whilst July inflation is expected to inch higher at 17.2% (June: 16.5%).