EUR 140.56 For Business Accounts Only

Breakfast Report - 5 December 2016

• The Central Bank of Nigeria released the Purchasing Managers’ Index (PMI) for the month of November, showing another month of economic contraction. The Manufacturing PMI registered at 46.0, an improvement on October’s reading of 44.1 but still below the 50 threshold that indicates no change in the level of business activity in the sector. Conversely, the non-Manufacturing PMI clocked in at 42.8 in November, representing a further dip from 43.4 in October following steeper contractions in employment levels and the level of incoming business received. All PMI readings for this year have now come in below 50, indicating that the economy is headed for a full year of economic contraction.
• Meanwhile, the National Bureau of Statistics revealed that the total value of Nigeria’s international trade in Q3’16 (₦4,722 billion) rose 17% y/y for the first time since the oil price crash as currency depreciation during the quarter inflated the value of traded goods and services. Imports during the quarter were 43% higher than in the corresponding period of 2015 and though exports were 1% down y/y, they rose 29% q/q to shrink the current account deficit to ₦104 million, a mere 0.4% of GDP (Q2’16: 2.1%).
• The Nigerian Stock Exchange Domestic and Foreign Portfolio Participation report estimated total volume traded in October at ₦64 billion, the lowest value so far in 2016. Both domestic (-36%) and foreign (-28%) participation declined during the month but domestic investors continue to account for the larger share (51%) of market activity.
• After six weeks of negative weekly returns, the Nigerian bourse posted a positive weekly return (161bps w/w) as bargain hunters stepped into a deeply oversold market and snapped up downtrodden bellwethers. Energy stocks paced the gainers as the Oil & Gas sector posted an impressive 9.97% w/w return. Notably, MOBIL closed limit up for four-consecutive sessions, riding on positive sentiment on deal valuation of ExxonMobil’s proposed sale of 60% stake to NIPCO.
• Whilst the prospect for further bargain hunting persists, we highlight that gains might be capped as investors could begin to lock in quick profit.