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Breakfast Report - 5 February, 2018

The Week Ahead                                                    

According to the Industrialise Africa report released by the African Development Bank (AfDB), Industrial Gross Domestic Product (GDP) is low across the continent. Nigeria ranks 8th in Africa in terms of Industrial contribution to GDP (13.1%), with South Africa (44.8%), Egypt (30.1%) and Cote d’Ivoire (29.0%) the top-ranked countries. According to the president of the AfDB, Dr. Akinwumi Adesina, six flagship programs have been put in place to help boost the continent’s industrial GDP by 13% in 2025 and drive overall GDP from $2.3 trillion to $5.6 trillion. In Nigeria, the Economic Recovery & Growth Plan (ERGP) highlights the Manufacturing sector as one of six priority areas, with an average growth target of 8.48% between 2018 and 2020.                                           

After an even split between sector gainers and losers, the Nigerian equity market (+40bps) posted a green close on Friday, taking the week’s return to 198bps. We note the renewed interest in select banking names at the end of last week, and expect this to filter into this week. We however foresee an overall mixed session as investors continue to cherry pick.       

Stock Watch: After closing in negative territory all week long, NB shed 5% of its value w/w. The stock currently trades at ₦144.50, slightly below Vetiva target price of ₦146.51 and has returned 7% ytd.                                      

Despite a slight improvement in system liquidity at week close, we expect yields to remain sticky in the T-bills market as the CBN likely resumes mop ups today. Similarly, we anticipate further flat trading in the bond market.