Dear Afrinvestor,

Please find below our Weekly Update for the week ended 19^th October, 2012.

Key Highlights: -

Macroeconomic /Socio-Political Update

·         Inflation in Nigeria has eased for the third straight month to 11.3% percent year-on-year in September, down from its previous 11.7%   year-on-year in August.

·         Fitch Ratings has declared Nigeria’s Short-term foreign currency IDR at ‘B’. The Country’s Ceiling has been affirmed at ‘BB-’.

Equity Market Review & Outlook

·         Sentiments were generally bullish on Global Equities last week; European and Asian stocks both fared well, with the biggest gain of 3.4% recorded by France CAC 40.

·         We expect the Nigerian equity market to close in positive territory this week.

Money Market Review & Outlook

·         FAAC credits for the month of September 2012 boosted liquidity in the money market last week, sending interbank rates south from an initial three day upward trajectory.

·          We We expect money market rates to hover around current levels this week, in view of the current system liquidity.

Foreign Exchange Market Review & Outlook

·         The CBN offered US$330.0m but sold US$312.2m at the WDAS last week – US$150.0m and US$162.2m at Monday and Wednesday’s  auctions respectively

·         We expect the Naira to lose further ground to the greenback at the interbank, BDC and parallel markets this week.

Bond Market Review & Outlook

·         The FGN bond market swung in to bullish territory last week, as September’s liquidity inflows from FAAC resulted in drop in yields on all traded instruments (ex the 10yr  9.35% FGN AUG 2017).

·         We expect bullish sentiments to persist on domestic fixed income instruments this week.