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What To Expect From The Markets This Week - 130818

Market Updates	4291 VIEWS
Market Updates
4291 VIEWS

Saturday, August 11, 2018 08:00 AM / Proshare Content

Nigeria: Economic Dashboard @ 100818

From the Editor’s Desk

In the week ahead, the National Bureau of Statistics (NBS) will publish the Inflation report for July 2018. While we do believe the divergence in trajectory in price movement between advance and emerging economies will still persist for some time, though the occurrence of another scenario of first round effect is grim in emerging economies as Central banks of advanced economies intend to wind down their balance sheet; as the era of missing inflation have come to an abrupt end. However, the possibility of a pass through inflation streaming from currency vagaries into emerging countries will take some time to take hold.

Back home, Inflation in the month of June fell as earlier forecasted. However, an undercut to our forecast by 0.46 was considered due to inflation inertia in food prices. This underlines the limitation of an ARIMA model to fully capture both supply shocks and push back on the heel of seasonality effect. More importantly, it points to how growing qualitative factors could slow down the pace of disinflation, especially in the face of uncertainty.

Moving forward, we revised our inflation forecast by adopting a regression model ahead of the initial ARIMA model given the current reality. At the same time taking into consideration that currency out of bank (COB) have become a pseudo anchor to price movement due to election spending. Regardless, we are of the opinion that food inflation will further cave inwards at a relatively lower pace for July 2018 to 12.63%, reflecting a 0.35% shave in food inflation.

Fig 1: Food Inflation

Source: NBS, Proshare Research

In addition, we see month on month (MOM) inflation maintaining its northward trajectory moderately from 1.2% in June to 1.22% in July. Further bolstering a hawkish tone from the Central bank, due to the uptick in liquidity.

Fig 2: Inflation and Real Interest Rate

Proshare Nigeria Pvt. Ltd.

Source: NBS, CBN, Proshare Research

Holistically, we see headline inflation maintaining a southward trajectory regardless of the uptick in liquidity. Therefore, we expect inflation to dip from 11.2% in June to 10.9% in July, thus reflecting a slight tilt towards the southward trajectory by 0.3%. Concurrently supporting a minute shave in inflation premium, at the same time buffering real interest rate. The positive real interest has not provided the needed scaffold for savings, regardless rate on treasury bills is expected to tint slightly in the coming period.

News Post: Inflation Rate to Drop Marginally to 11.01% in July 2018

Download the June 2018 CPI Report HERE

Monday, August 13, 2018

Aluminium Extrusion Industries Plc will be marked down this day by the NSE having declared a dividend of N0.085 in the preceding week.

The Nigeria 2018 Social Media Summit will continue this day in Abuja, while the 1^st Annual International Academic Conference on Taxation will kick start this day in Nasarawa.

The July 2018 Inflation Report for Italy will be released this day.

Tuesday, August 14, 2018

The Upgraded version of theAnalyst Platform - Proshare Markets will be launched this day, while Linkage Assurance Plc will be marked down by the NSE having declared a dividend of N 0.0 5 in the preceding week.

The 5th Annual Labour /Trade Union Conference will hold this day in Enugu.

Germany’s Gross Domestic Product (GDP) for Q2 2018 will be released this day just as China releases its Retail Sales and Industrial Production Report for July 2018.

Wednesday, August 15, 2018

The National Bureau of Statistics will this day release the CPI & Inflation July 2018 Report, while the CVL Tribute Colloquium in Honour of Prof Jo Irukwu themed “The Insurance Industry: National Savings and Financial Market - Reaching for Higher Levels of Performance” holds in Lagos.

The NAPE Lagos August Technical/Business meeting will hold this day in Lagos.

UK’s Inflation Report for July 2018 will be released this day just as the United States releases its Retail Sales and Industrial Production Report for July 2018.

Thursday, August 16, 2018

The National Bureau of Statistics will this day release the FAAC June 2018 Report while Rak Unity Petroleum Company Plc holds its Annual General Meeting on the same day.

The Lagos Chapter 2018 Annual Agribusiness Conference and the Customer Segmentation Framework Launch & Exhibition will hold this day in Lagos.

UK’s Retail Sales Report for July 2018 will be released this day just as Australia releases its Unemployment rate for July 2018.

Friday, August 17, 2018

ABC Transport Plc’s Annual General Meeting will hold this day, just as the Third Edition of the Annual Maritime Conference holds in Lagos.

The European Union and Canada’s Inflation Report for July 2018 will be released this day.

Check out our Events Calendar for event details and follow us on Web, TV, APP and Social Media for updates as the week unfolds. Yours to Serve!

Contact for Details:

For further information, enquiry or submission of information, kindly email market@proshareng.com and research@proshareng.com Tel: 0700PROSHARE (070077674273). We are waiting to hear from you!