FREE

Breakfast Report - 30 December, 2019

Last week, The Federal Inland Revenue Service (FIRS) reported a revenue shortfall of ₦3.7 trillion for 2019, after generating ₦5 trillion in revenue for 2019. The FIRS had projected it would generate ₦8.8 trillion in revenue for 2019, forecasting a total revenue of ₦45.7 trillion between 2011 and 2019. However, the FIRS was only able to generate ₦40.5 trillion in that timespan, despite its workforce growing over the same period. 2012 represents the lone-year in which the FIRS was able to surpass its revenue projection, where it generated ₦4.6 trillion compared to its projection of ₦3.6 trillion. Nigeria’s lower tax collections are a reflection of a lean tax net, a large uncaptured informal sector and limited investments in tax collection infrastructure. With the government’s tax receipts coming in lower than expected, this poses a potential drag on the government’s drive to effectively implement the 2020 record budget of ₦10.6 trillion.

Equity: With fund managers rebalancing their portfolio for the end of the year, we expect the market to close in the green at the start of this week.

Stock Watch: NESTLE emerged as the best performing stock on Friday, gaining 10.00% to close at its intra-day maximum price of ₦1,430.00. The heavyweight stock traded a total of c.325k units with most trades occurring at the bid side.

Fixed Income: With c.₦900 billion in maturities expected to hit the system after the holiday period, we expect the bulls to drive trading activity in the NTB space this week. In the bond market, we expect the market to trade in a similar pattern as investors seek alternative investments.