EUR 118.14 For Business Accounts Only

Breakfast Report - 6th June 2016

• The Central Bank of Nigeria (CBN) is in consultations with key stakeholders in the financial system, starting with Treasurers of banks, to discuss its planned adoption of a flexible exchange regime. The consultation is expected to extend to Bank executives and the wider economy. Whilst this suggests the imminent announcement of the details of the new FX regime, we highlight that the continued delay would continue to weigh on investor sentiment.
• The CBN released Purchasing Managers’ Index (PMI) for the month of May which showed a rise in manufacturing PMI to 45.8 points (April: 43.7), indicating a fifth consecutive decline in manufacturing activities though at slower rate compared to April. This comes on the back of continued declines in Petroleum & Coal Products and Non-metallic Mineral Products sub-sectors amidst slight improvement in Cement, Computer & Electronic Products, Plastic & Rubber and Transportation Equipment amongst others sub-sectors during the month. The Non-manufacturing PMI also declined for the fifth consecutive month albeit at the same pace with April’s 44.3 points. Going forward, we still see room for improvement in business activity as we expect the adoption of the flexible FX regime, recent liberalization of the Downstream Oil & Gas sector and implementation of the 2016 budget to improve the business environment.
• The Nigerian equity market see-sawed between green and red closes this past week as investors continue to await details from CBN on the new foreign exchange regime. Notably, the market recorded two straight positive sessions after two previous sessions of sizeable declines to finish the week 439bps down w/w with year to date at return at negative 3.52%.
• We note the renewed interest in large caps across key sectors and expect this to filter into the coming sessions. We however expect that market will continue to keep an eye on development surrounding the new currency framework.