The Market Today - 24 May, 2017
​Nigeria’s economy shrinks at slower rate in Q1’17
Nigeria’s Q1’17 GDP growth slightly beat our expectations, clocking in at -0.5% (Vetiva: -0.7%), driven by continued growth in Agriculture (3.4% y/y) and stronger than expected growth in Manufacturing (1.4% y/y). Meanwhile, the Oil sector (-11.5% y/y) and Services (-0.3% y/y) declined in the quarter. Growth in Manufacturing was a notable bright spot after the full-year decline in 2016 (4.3% y/y). It is likely that the improvement in access to FX as the Central Bank of Nigeria injected dollars into the economy through a range of auctions and intervention windows has lifted this part of the economy. Meanwhile, indicators suggest that Nigeria’s economy is on an upward curve (April Manufacturing PMI: 51.1) and we expect the economy to post its first positive growth figure in six quarters come Q2’17. Overall, we project an expansion of 2.1% (unchanged from previous forecast) in Q2’17 and cumulative growth of 2.0% (Previous: 1.9%) for FY’17.
ASI overturns losses, boosted by Consumer Goods stocks
Boosted by strong gains in Consumer Goods stocks, the NSE ASI upturned losses to close 11bps higher yesterday. Trading pattern on the NSE remained mixed for the second consecutive day, with volume & value traded dwindling as investors adopt a cautious stance. We expect this trend to persist at mid-week even as the mildly positive bias is sustained.
Stock Watch: After adding 80% in a 12-session bullish rally, OANDO has been on a downtrend. The Oil & Gas giant which dipped 110 bps yesterday has lost 6% over the past nine sessions. OANDO has returned 91% ytd.
Yields decline ahead of MPC decision
Ahead of the MPC announcement, modest buying interest surfaced in the bills space as traders covered short positions. Meanwhile, the bond market traded mixed albeit with a bearish bias at the long end of the curve. With the MPC showing a slightly hawkish leaning and liquidity pressures persisting, we expect fixed income yields to trend north at mid week.
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