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Breakfast Report - 30 July, 2018

The Week Ahead

According to the National Bureau of Statistics calendar, Q2’18 Gross Domestic (GDP) data is expected to be released today. Recovering oil production and expansion in agriculture have driven growth in recent quarters and though the pace remains slow, we expect another quarter of economic expansion —Vetiva: 1.6% y/y, Consensus: 2.0% y/y. The ongoing violence in food producing regions in the country is expected to limit agricultural output, and oil production likely declined by 100kb/d q/q in Q2’18 as a result of Force Majeure placed on key pipelines. Although Q1’18 performance was relatively below par—2.0% y/y growth vs 2.6% y/y consensus —we expect strengthening industrial output to boost growth. Overall, we still expect 2018 growth to come in at 1.9% y/y, outpacing 2017 growth of 0.9% y/y.         

                     
Equity: The Nigerian Equity market drew to a positive close, finishing 58bps higher on Friday majorly supported by Oil & Gas stocks. The All-Share Index however recorded a modest 9bps w/w rise amidst notable losses recorded at mid- last week. Though the market managed a positive performance at the end of last week, we believe the outcome of earnings releases will remain the major determinant of market direction this week. That said, we foresee a mildly positive start to the week, noting the widely

Stock Watch: SEPLAT released its H1’18 results today. The company recorded a N65 billion y/y rise in revenue, and a N23 billion y/y increase in PAT. The stock currently trades at N625, 0.19% down from its year high of N785.

Fixed Income: Whilst we expect the tightened liquidity to keep yields elevated across the fixed income market today, we highlight a potential demand boost from asset managers, driven by a Commercial Paper maturity from FLOURMILL due on Tuesday.