Dear Afrinvestor,

Please find below our Weekly Update for the week ended 26^th October, 2012.

Key Highlights: -

Macroeconomic /Socio-Political Update

·         The Nigerian National Petroleum Corporation (NNPC) revealed that Nigeria's oil production dropped from an average of 2.5 million bpd in H1 2012 to an average between 2.1 and 2.2 million barrels per day (bpd) last week, following flooding and a major outage on a Shell facility.

·         Oando has begun production of about 2,000 barrels per day from the Ebendo-4 well, increasing its total output by 40 percent.

Equity Market Review & Outlook

·         Sentiments were generally bearish on Global Equities last week: All European stocks fell last week, with the biggest loss of -2.0% recorded by France and Germany respectively.

·         We expect further profit taking activities in the Nigerian equity market this week. 

Money Market Review & Outlook

·         The money market closed in liquid territory last week, despite sizeable outflows for two WDAS auctions during the three-day week. Interbank rates subsequently inched up week-on-week, with emphasis on the short-end.

·         We expect money market rates to head further north albeit marginally by the end of the week.

Foreign Exchange Market Review & Outlook

·         The CBN offered US$300.0m but sold US$293.0m at the WDAS last week – US$150.0m and US$143.0m at Monday and Wednesdays auctions respectively.

·         We expect to see marginal gains for the Naira across markets this week.

Bond Market Review & Outlook

·         Mixed sentiments were recorded in the FGN bond market last week, with price increments on all short tenured instruments (ex the 5yr 4.00% FGN APR 2015 and 7yr 9.20% FGN JUN 2014).

·         We expect bullish sentiments to persist on Nigeria’s Eurobond this week.