The National Bureau of Statistics (NBS) released Nigeria’s Q2’18 Gross Domestic Product (GDP) figures this morning, showing a real growth of 1.5% y/y (Vetiva: 1.6%, Consensus: 2.0%) for the period, below the 2.0% reported in the first quarter of 2018. Notably, we highlight that the slower pace of economic growth was partly driven by a weaker performance in the Oil & Gas sector – reporting a negative y/y real GDP growth of 4.0% (Q1’18: 14.8%) – following the moderation in oil production (Q2’18: 1.84mpd, Q1’18: 2.0mpd) due to a force majeure on some pipelines during the period. Furthermore, sectoral contribution to GDP showed a mixed trend with the rout in Agriculture sector accelerating in Q2’18 (GDP printing at 1.2% vs. 3.0% in Q1’18). Meanwhile, whilst growth in the Services sector picked up (Q2’18: 2.1%, Q1’18: -0.47%), momentum in the Manufacturing sector slowed significantly with Q2’18 GDP at 0.40% vs 6.9% recorded in the previous quarter. Further driven by the weaker than expected GDP figure, we expect sustained downbeat sentiment in the capital markets this week.
The ASI posted slight gains in the shortened week, rallying 63bps on Friday to clinch a 45bps w/w gain, the first positive w/w close in four weeks. We note that last week’s positive close was driven by a spike in a few large-cap stocks, and market sentiment was broadly weak-evidenced by negative w/w closes across three of four key sectors. We anticipate a cautious start to this week’s trading.
ETERNA has lost 6% in the last seven sessions, the stock is currently trading at ₦6.00 and has returned 48% YTD, outperforming the Oil and Gas sector (YTD: -11%).
There has been notable buying on short-dated bills, buoyed by healthy system liquidity and this should persist today. However, a cautious market outlook on long-term yields would continue to drive cautious trading in the bond space.