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Breakfast Report - 29 November 2021

At the last MPC meeting of the year and in line with our expectations, the Monetary Policy Committee decided to keep all parameters constant. The sustained decline in inflation combined with rising output growth remains a strong premise for a HOLD decision. Although rising inflation on the global scene has set the pace for tapering, the CBN Governor posits that countries that have experienced buoyant external flows would be under pressure to hike interest rates. While this presumes less pressure on the Nigerian markets, sustained aversion towards Naira assets could induce rate hikes in the future. Therefore, we expect that a hold policy will persist well into 2022 unless macro fundamentals change.

Equity: Although the NGX ASI closed in the green on Friday, the domestic market maintained its weekly bearish run amidst negative market breadth from sell pressures seen on some bellwether stocks. We expect this bearish tone to filter into this week’s trading sessions, as investors continue to bargain-hunt across board.

Stock Watch: In last Friday’s session, FBNH was a top gainer, advancing 3.90% to close at ₦12.00 and has currently gained 67.83% ytd.

Fixed Income: In the week ahead, we expect the healthy level of system liquidity to drive activity in the NTB market and maintain the current bullish sentiment. Meanwhile, in the absence of market catalysts, we anticipate a similar trading pattern to last weeks close, as weak activity in the bonds segment continues.