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Breakfast Report - 30 August 2021

The Week Ahead
Recently, the National Bureau of Statistics released Q2’21 GDP results for Nigeria. The outcome was in line with our expectations as the economy expanded by 5.01% y/y. While this is our best performance in 7 years, the economy was unable to recover all ground lost during the pandemic last year, despite the absence of lockdowns in the current year. Although we noticed an impressive comeback in the trade sector, which has been on a 5-year decline, this performance was hindered by the woes of the oil sector, which continues to reel from the slump in demand from India as well as supply-side structural challenges. Other key contributors to growth include the ICT, Transport, Power, and Manufacturing sectors. While the non-oil sector was the main driver of growth, we remain cautiously optimistic about the oil sector, which has been underperforming due to infrastructural challenges. Nonetheless, we anticipate a 4.1% y/y recovery in Q3’21.
Equity: We expect market activity levels to improve largely on the back of increased demand in the Tier-1 banking names, like we saw on Friday last week, especially as these companies begin to release their audited H1’21 Earnings and investors position for possible favourable dividend announcements.
Fixed Income:In the absence of market catalysts, we expect the bonds market to remain bullish in the near term, while, given the constrained levels of system liquidity, we anticipate tepid trading in the NTB and OMO segments