Dear Afrinvestor,

Please find below our Weekly Update for the week ended 21^st September, 2012.

Key Highlights: -

Macroeconomic /Socio-Political Update

·         Nigeria's headline inflation declined to 11.7% year-on-year in August from 12.8% in July, according to the National Bureau of Statistics.

·         The Monetary Policy Committee (MPC) of the CBN met on the 17th and 18th of September 2012 to review the current domestic and international economic and financial developments, including challenges facing the Nigerian economy in the near term.

Equity Market Review & Outlook

·         Globally, equities moved mostly lower last week due to skepticism over planned Spanish bailout.

·         In Nigeria, the NSE All-Share Index made a 212bps increase in the benchmark index from 25337.18 to 25873.71 as the NSE made a few changes to the market structure, one of them being the adjustment of lower/upper trading limits (circuit breaker) from 5% to 10% for securities that get rolled out in the programme; The changes are part of their efforts to shore up liquidity in the market.

Money Market Review & Outlook

·         The money market closed in a liquid position last week due to FAAC credits for the month of August 2012 in excess of N300.0bn.

·         We expect money market rates to inch up moderately this week.

Foreign Exchange Market Review & Outlook

·         The CBN offered US$380.0m but sold US$309.4m at the WDAS last week. The Naira closed flat at N155.78/US$1.00 on both auction sessions.

·         We expect the Naira to strengthen slightly at the interbank market this week.

Bond Market Review & Outlook

·         Sentiments were bearish in the bond market last week, as all traded instruments excluding the 7.0% FGN Oct 2019 dipped in price as their respective yields increased.

·         We expect sentiments to reverse to the bullish side this week in the local bond market.