Nigeria at Crossroads Economic...Flight Frequency into Nigeria Politics South Africa 5.75 5.3 Zenith 15 Recent presidential election in May.’14 , Election held every 5 years Angola

Monthly Economic News and Views

at Lagos Business School

Executive Breakfast Meeting

February 4, 2015

Nigeria at Crossroads Stability or Change – Which do you Prefer??

Presented by B.J. Rewane

Financial Derivatives Company Limited


2

Outline - Election Fever, Oil Price Recovery, Naira Flat

What We Said on January 28

The World in 2 Weeks

Commodities

Domestic Economy

Capital Markets

Policy Direction

Political Update

Outlook


3

On January 28 We Said…

Oil price declined to $46.59pb

A 5½ year low

Cumulative 8 week drop of 35%

Worldwide rig count is 3570 of which 100 are idle

Idle rigs have increased from 70 to 100 since December

Active rigs in Nigeria down by 1 to 18 in December

Global commodities index (BCOM) down by 19.7% YTD

Oil is 48% of the weight


4


Nigeria’s broad money supply increased 7.29%, as against

annual target of 15%

Power output from the grid is up marginally at 3700MW

Retailers’ inventory levels down to 5 weeks from 12-week

levels

Destocking after consumer resistance to price increase


5


Naira depreciated below the psychological resistance of

N200/$, testing the N210 level

Spread between the parallel & official markets increased

to N42 or 20%

Stock market after adjusting for devaluation is down

15.48% in 2015


6

Update on Oil Shocks

Exports down 12.3% to $78.2bn

Imports sticky at $50.7bn

Revenue down 45%

Reserves down 20.85% Y-o-Y

FDI down 17.9%

0

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Imports ($'bn) Exports ($'bn) Trade balance ($'bn)


7

What We Forecast…

J.P Morgan forecast for oil

Q1: $42pb

Q2: $43pb

Average 2015: $49pb

Long term recovery in 2019

Naira to trade at N195/$ at the interbank

N205/$ – N210/$ at the parallel market

NOPs will be increased to 1%

Stock market will remain flat to down through February

Commodity prices will slip


8

What We Forecast…

Inflation will inch up to 9% in February

Banks will announce capital raising plans

Fiscal deficit will widen

There will be a complete change of guards at Abuja

External reserves will deplete to $33bn

The policy direction, pace and enforcement will be more

defensive


US - Q4 GDP Growth Misses Mark

Lower oil prices boosted consumer

spending

Govt spending slowed by 7.5%

Stronger dollar estimated to have

lowered growth by a whole

percentage point

Export growth slowed to 2.8%

from 4.5% in Q3’14

Import growth surged to 8.9% from

-0.9% in Q3’14

US GDP grew by 2.6% in Q4’14

Lower than the 3.2% growth

expected

Lower than 5.0% recorded in

Q3’14

2.7

1.8

4.5

3.5

-2.1

4.6 5.0

2.6

-3

-2

-1

0

1

2

3

4

5

6

1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014

Source: Commerce Department

10


11

US - Inflation is Down-Fed is Watching

Consumer Price Inflation (CPI) down to 0.8% in December

Biggest 1-month decline in 6 years

Pulled down by plunging energy costs

Makes the timing of an interest rate increase tricky

Evidence of firmer inflation needed before change of stance

CPI has been below the Fed’s 2% target since April 2012


12

Europe

Euro down 6.6% to 1.13/$ so far in 2015

Swiss Central Bank’s decision to end currency ceiling

continues to send shockwaves

European banks have issued profit warnings

Major forex trading firms have been adversely hit

Alpari has declared bankruptcy

Swiss franc-denominated mortgage payments have soared


13

China

China grew by 7.4% in 2014 - Slowest pace since 1990

China willing to accept slower growth in a bid to:

Shift to a growth path that makes investment less reliant on

credit that has fuelled a property boom

Lift the living standards of the burgeoning middle-class


14

Sub-Saharan Africa – Peer Comparison

Source: FDC Research, Bloomberg, Trading Economics

Country

Policy

Direction

(% p.a.)

Inflation

Rate (%) Nigerian

Banks

Flight

Frequency

into Nigeria Politics

South

Africa 5.75 5.3 Zenith 15

Recent presidential

election in May.’14 ,

Election held every 5

years

Angola 9 7.48 Skye 3

Last Presidential election

was in August 2012.

Elections are held every

4 years

Kenya 8.5 5.53 Ecobank, GTB,

UBA 10

Last presidential election

was in December 2013.

elections are held every

5 years

Ghana 21 17

Access,

Ecobank, FBN,

GTB, UBA,

Zenith

39

Recent presidential

election in Dec.’12

Elections held every 4

years

Com

mod

itie

s

Oil prices gain momentum


17

Oil Prices Gain Momentum

The Bloomberg Commodity Index (BCOM) is up by 0.57%

week-on-week

But still down by19.8% YTD

Oil price rebounded on signs of output cut by US

producers

US demand for leasing oil rigs is slowing

90 rigs idled in the US in the past week

US rig count now down to 1,543

Brent oil price up by 20.25% to $57.91pb from $48.16pb

Grain prices still on a decline due to global glut


18

Commodity

Weekly Change

(Jan. 26 – Feb. 3) Y-o-Y Change

Energy

Brent 20.25% -46.35%

WTI 17.5% -41.54%

Natural Gas -4.51% -36.02%

Grains

Corn 0.46% -10.63%

Wheat -1.30% -9.71%

Rough Rice -4.59% -26.15%

Soft

Sugar -5.73% -7.12%

Cocoa -1.68% -0.41%

Oil Seeds

Palm Oil -1.58% -23.06%

Source: Bloomberg, Reuters, FDC Research

Non-Oil Commodity Prices trend Downwards


19

Oil Surge - Bloomberg’s View

Recent oil price surge: an industry in despair

Oil rigs idled now 352 in past 8 weeks

BP to reduce spending to $20bn this year compared to

$26bn previously planned

How low can prices go and still sustain the US oil boom?

History of oil prices follow a golden rule:

What goes down must come up

Eventually supply will shrink and prices will rise again

Domestic Economic Performance


21

Source: EIU, EIA , OPEC, CBN, FDC Research , (* FDC’s forecasts)

Leading Economic Indicators (LEI’s)

Indicators December January % Change February

Oil Price ($’pb) 45.13 57.91 28.32 55

Exchange Rate (N/$ - Inter-

bank)

186.10 192 2.79 195

Inflation Rate (% - ave) 8.0 *8.3 0.30 9.14

MPR(% p.a.) 13 13 - 13

External Reserves ($’bn) 34.47 34.46 0.03 32

NSE ASI (% change) 0.33 14.07 -14.4 -10

Market Cap (N’trn) 11.48 9.85 14.2 9.00

Vacancy Factor VI (Residential

vs. Commercial)

31%: 13% 32%:17% - -

Vacancy Factor Ikoyi

(Residential vs Commercial)

9%:2% 11%: 3% - -


22

Declining Growth Trajectory

Q4’14 to come in slightly lower than in Q3’14

Due to macro headwinds

Finance minister estimated negative impact from north east insecurity at 0.05% annually

Further decline expected in Q1’14 due to planting

Sharp drop in PMI to 56.4 in January

Down from 60.4 in December 2014

Reduced confirmation lines of credit

After a Nov-Dec pile up

Inventories are being drawn down

New inventories as replacement cost more expensive

Devaluation plus carrying cost


23

Oil Prices up, External Reserves down

Global oil prices rebound on signs of output cuts in the US

Brent crude currently up 28.32% YTD at $57.91pb

From a low of $45.13pb in January

Have oil prices bottomed out?

Or is there a new floor?

Average of $50-55pb expected in February

$1.74bn was sold at the RDAS in January compared to $1.21bn in December

Due to fewer auction days in December

External reserves is down by 0.61% to $34.28bn

$32bn expected in March

5.10 months of imports and payments Source: CBN, FDC Research


24

Oil Prices up, External Reserves down

Source: CBN, FDC Research

30.00

32.00

34.00

36.00

38.00

40.00

42.00

44.00

46.00

48.00

50.00

Apr May Jun Jul Aug Sep Oct Nov Dec Jan

External Reserves ($'bn)

2013 2014


25

Naira Remains Under Pressure

Naira trading at record low of N210/$ at the parallel market

Depreciated by 16.17% (y-o-y) at interbank market

Flat at N168/$ in RDAS market

Special intervention for Bureau de Change (BDCs) to increase supply

Market is inelastic

Buy! Buy!! Buy!!!

CBN introduces new policy measures

NOP increased to 0.5% from 0.1%

Submission of details on all domiciliary accounts with Banks

Independent of election outcome, the naira is expected to depreciate slightly in March


26

Foreign Inflows Down in Nigeria

FDI flows into Nigeria down for the 3rd consecutive year to $4.9bn

Contrary to $704bn (4% growth) in developing economies

FPI inflows in Q2’14 slowed to $3.9bn compared to $6.5bn in Q2’13

FPI inflows in H1’14 were less than Q2’13

Foreign inflows on the NSE between January and November 2014 increased to $3.9bn from $3.14bn

Total foreign outflows in the first 11 months totalled $4.99bn, up from $2.98bn in the corresponding period of 2013

Reflecting a sell off

4.4

3.9

3.2

3.8

4.7

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2013 2014 2015 2016 2017

FDI ($'bn)

Source: EIU


27

January Inflation to Spike to 8.3%

FDC forecasts an increase in

inflation to 8.3% in January

From 8% in December 2014

Impact of weaker currency,

seasonality

8.0%

7.7%

7.8%

7.9%

8.0%

8.2%

8.3%

8.5%

8.3%

8.1%

7.9%

8.0%

*8.3%

7.5%

7.7%

7.9%

8.1%

8.3%

8.5%

8.7%

Headline Inflation Rate

Source: NBS, FDC Research


28

Liquidity Drives Interest Rates Down

Annualized money supply (M2)

increased to 7.29% in December

2014

Interest rates continue to move

in tandem with liquidity level

Average OBB & ON rates

peaked at 14.94% p.a. in the last

two weeks

No major change expected until

after elections

0

5

10

15

20

5-J

an

7-J

an

9-J

an

11-J

an

13-J

an

15-J

an

17-J

an

19-J

an

21-J

an

23-J

an

25-J

an

27-J

an

29-J

an

31-J

an

2-F

eb

OBB ON 30 90 180

Source: FMDQ, FDC Research


31

Global - Policy Divergence to Continue

US Fed expected to raise interest rates later this year

MPC of Bank of England decided to keep interest rates at

record lows in a unanimous vote

Growing concerns about a long bout of low inflation

ECB announces large-scale QE

To purchase €60bn/month in assets for the next 20 months

In response to anaemic recovery and “lowflation”

Bank of Canada announces rate cut from 1% to 0.75%

Sharp drop in oil prices a threat to growth and underlying

inflation

Bank of Japan (BoJ) to employ further stimulus measures


32

Domestic - New CBN Directive

The CBN issued a new directive to all deposit money

banks on the submission of domiciliary accounts details as

follows:

List of all Dom acc holders stating name, account number and

balances at 29th January 2015

Total balance of all Dom accounts as at 29th of January, 2015

List of corporate domiciliary account holders and their balances

List of individual domiciliary account holders and their balances

List of public sector institutions domiciliary account holders and

their balances

The mode of lodgement to the account for each of the above

transactions (either cash or by wire transfer)


33

Implications

Apex bank concerned about high level of domiciliary

balances at average of 1% p.a.

Believes domiciliary transactions are used for round

tripping

A breach of confidentiality

Will fuel a rush of transfers to overseas banks

A fear that CBN will now seek for information on naira

accounts

Could become a tool for taxation or witch-hunting


35

Global Markets……A Changing Shape

Apple vs. Samsung vs. Microsoft (Nokia)

Apple release Q4 earnings with record profit of $18bn

The I-phone company beat its rivals Samsung, Microsoft

and Google

Quarterly revenue of $74.6bn higher than combined

revenue of Google, Microsoft and Amazon - $73.9bn

Google full year revenues at $66bn


36

Global Markets……A Changing Shape

Revenue Growth

Apple 30%, Google 15%, Amazon 15% and Microsoft 8%

Apple also beat its stiffest rival Samsung

Revenues down 11% to $48bn

Net income down 27% to $4.89bn

Also sold $6.5bn bonds

The future: I-watch, Apple-pay coming but Google glass

out


Global Markets

-20% -15% -10% -5% 0% 5% 10% 15% 20%

MICEX

JALSH

FTSE 100

KNSMIDX

S & P 500

DOW

GGSECI

IBOVESPA

NSEASI

Global Indices Performance

European Central Bank (ECB) to oil markets with €60bn monthly

Appetite for risk boosted by the ECB’s action

Nigerian and Russian markets miles apart despite facing similar

challenges as oil producing nations

Vodka and Kalashnikov Vs ____________?

Russia bracing for the worst,

Reserves depleted to $388bn from $511bn in 2014

Nigeria’s reserves at $34.2bn

37


NSE ASI – Directionless and Drifting

Free fall of equities prices flattening out

Market highly apprehensive

2 days of positive gains this week

Investors lost N1.6trn of value

Index down by 14.70% in January 2015

Pendulum movements – swinging between red and black

The struggle for direction - Fear vs. Value

26,000.00

27,500.00

29,000.00

30,500.00

32,000.00

33,500.00

35,000.00

NSE A

SI (P

oin

ts)

Jan 2015

ASI

38


39

January 2015 Highlights

NSE ASI down by 14.70% to 29,562.07 points

Market capitalization down to N9.85trn from N11.48trn

Total turnover of N94.86bn against N100bn in December

Average daily turnover of N4.75bn

Rights Issue

Oando re-priced rights issue to N16.50 from N22

Access Bank launches rights offer at N6.90 against N8.90

7UP, PZ and Guinness report earnings

Revealed challenges of consumer sector

But shows resilience of leading brands


Sectors in January

Banking and consumer stocks significantly hit

The darlings of FPIs feel the heat: NESTLE, NB, GUARANTY, ZENITH

Selling is not because of weak stocks but for liquidity reasons

Banking sector P.E of 6.49x and P/BV of 0.61x

Buying opportunities abound for the discerning

Resilience, Brand, Strategy, Performance and Market Share (Size)

-20% -15% -10% -5% 0%

Insurance

Oil & Gas

Industrial

Consumer

Banking

Sectors in January

Change %

0

10

20

30

40

50

FinancialServices

Oil & Gas Consumer Industrial

NG

N (

Billions)

Turnover

Value

40


41

NSE in 2015…Bank of America (BofAML)

Bank of America sees 11% drop in corporate earnings

Due to the 30% drop in crude oil prices

Consumption and export earnings will shrink

Not okay with Flour Mills of Nigeria and Guinness

Shrinking revenues and margins

Rising cost burdens

Like NESTLE, NB and DANGCEM

Market leaders in their various industries

Reliant on local sourcing of raw materials

Consistent growth in revenues

Scale economies and high margins

BofAML sees short term risks of naira depreciation and political tensions as opportunity


42

ZENITH and GUARANTY in 2015….Rencap

Zenith and Guaranty racing at the top

Zenith quite aggressive while Guaranty thrives on

efficiency

Regard each other as key competitor

Capital adequacy ratio of Zenith at 21% and GTB at 18%

Both banks expected to record good profits for 2014

Trading under their break-even Cost of Risk (COR) of

7.5% and 9%

Peak COR since 2004 of 5.2% and 7%

Rencap’s price target is N22 and N25 respectively


Winners and Losers…..Jan 2015

OKOMU AND DANGSUGAR

gained 8.28% and 7.40%

Commodity traders

benefitting from low prices

And speculation that CBN

Forex policy would offer

advantage

No dollar at RDAS to import

locally produced goods

The Big 5 were not spared

Creating good entry

opportunities

Company Jan-15 Dec-14 Change %

Presco Plc 32.66 24.50 33.31%

P Z Cussons Nigeria Plc. 29.64 23.80 24.54%

Cutix Plc. 1.55 1.30 19.23%

Union Bank Nig.Plc. 9.50 8.50 11.76%

U A C N PLC. 37.20 34.00 9.41%


Diamond Bank Plc 3.58 5.58 -35.84%

Dangote Flour Mills Plc 3.00 4.55 -34.07%

Julius Berger Nig. Plc. 44.89 60.66 -26.00%

Skye Bank Plc 1.99 2.66 -25.19%

Fidelity Bank Plc 1.25 1.62 -22.84%


Dangote Cement Plc 156.00 200.00 -22.00%

Nigerian Brew. Plc. 142.02 165.30 -14.08%

Nestle Nigeria Plc. 800.25 1011.75 -20.90%

Guaranty Trust Bank Plc. 20.03 25.18 -20.45%

Zenith Bank Plc 16.01 18.41 -13.04%

The Most Capitalized Stocks

43


44

Corporate Earnings

Company Revenue

Growth PBT Growth P.E Ratio Share Price

Growth

7UP 8.87% 14.07% 14.16x -5.68%

GUINNESS 4.76% -27.38% 21.00x -22.69%

PZ -2.47% -36.95% 27.96x 24.54%

Consumer firms facing high cost burdens and lower revenues

But leading brands seem to be maneuvering well

Guinness profits pared by exceptional item of N852mn

PBT was set to be N5.5bn

Stock prices of firms have corrected

Average sector P.E down to 32.70x from 40.82x in Dec’2014


45

Outlook

The downturn in the equities market will continue

As negative sentiment would dominate

Because FY’2014 corporate earnings will be weak

Also due to political tensions as general elections

approach

Expect increased volatility at current levels

Market P.E ratio of 19.71x is a gift

February will witness a downward, choppy trend

The tussle between bargain hunters and profit takers

would intensify

NSE ASI would remain below 30,000 points


NSE ASI in 2015

Q1

Q2

Q3

Q4

NSE ASI: Over the 4 Quarters

NSE ASI

The Rush to buy

Q1: “Weary investors”

Election fears

Crude oil prices

Weak corporate earnings

Q2: “Mixed Feeling”

Post election

Naira devaluation

Some stability

Q3: “The storm is over”

All the bad news would be out

Low and attractive price

The strong rebound is imminent

Q4: “Calm returns”

Positions taken in Q3

Profit taking

Last fools would still enter

46


Ships Awaiting Berth Decline

Ships awaiting berth at Apapa

down to 61 in January

14.1% lower than 71 in

December

Devaluation of the currency is

affecting imports

In tandem with a lower PMI

reading

Expect an increase in March

Source: NPA, FDC Research

49

68 64

70

81 79

71

61

0

10

20

30

40

50

60

70

80

90

Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15

No of Ships Awaiting Berth

49


Rig Count trend Downwards

US rig count down by 90 to

1,543 in January

Canada rig count down by 38

to 394

Number of active rigs in

Nigeria down to 18

From 19 in December

January figures not yet

available

1785

1543

15

18

0

2

4

6

8

10

12

14

16

18

20

0

500

1000

1500

2000

2500

US Nigeria

50


52

Retail Industry Update

Beer market has grown 9.5% in 2014

Malt market grew 15%

Highest growth is in the lowest price segment

The cheaper brands are growing 10 times faster than

premium

Customers are spending less for a higher alcohol

content

Possibly due to economic blues and mood swings

Supermarket and trade outlets have grown in excess of

30%

Bar consumption is up 10%


53

Retail Industry Update

Supermarkets, groceries and formal outlets account for

approximately 8% of sales of beer, malt and ready to

drink brands

Jos is fastest growing market followed by Lagos

Slowest market growth is Ibadan, growing by 3.5%


55

Uncertainty surrounding upcoming UK elections gradually

began to weigh on real estate activities

UK general election is scheduled for May 7, 2015

House prices down by 1.6% and 0.9% in the North West

and South West respectively

House prices still up in London by 1.8%

Expect a rebound in general real estate activities after the

elections

Political Uncertainty affect UK Real Estate

55


56

Boomerang buyers now set to re-enter the housing

market after the US real estate bubble in 2007

7-year window given to repair credit and qualify to buy a

home has passed since the foreclosure crisis

7.3 million buyers now eligible to re-enter

Recovery in the US economy is also positive for the real

estate market

US Real Estate – A Rebound Underway

56


57

Supply expected to exceed demand for properties in

Dubai for the next 3 years

Projections of a 5-10% drop in property prices in 2015

Buyers seeking for more affordable options rather than

oversupplied luxury segment

Volatile energy prices and stronger dollar also causing

foreign investors to hold back on real estate investments

in Dubai

Property prices have become more expensive for foreigners as

the dollar strengthens

UAE currency, dirham, is pegged to the dollar

Slowdown Expected in Dubai Real Estate

57


58

Watch Out for New Developments in Ikoyi

Purpose Dimension (Sq.

Metre)

Floors

Kingsway Towers,

Glover Road

Commercial 15, 000 15

BAT Rising Sun,

Opposite Ikoyi Club

Mixed-Use 19, 500 13 (4 floors for

office space)

Heritage Place,

Between Lugard and

Kingsway Avenue

Commercial 15,600 15 (8 floors for

office space)

Sogenal Towers,

Beside Mercedes Benz

Place

Mixed-Use 7,500 15

Office space of this standard usually cost $1,000 per sq. metre

per annum

Aviation Update


61

World’s Busiest International Airport

Jo’burg, Dubai, Nairobi and Cairo are amongst the top 100 most visited cities in the world

Dubai overtakes Heathrow airport as the busiest international hub

The goal is to make Dubai a global centre of aviation

Aviation is expected to account for over a third of Emirates’ GDP by 2020

Controls a significant portion of travel between the West, Asia and Australasia

Airport traffic increased by 6.1% in 2014 to 70.47m passengers

Heathrow handled 68.1m international passengers in 2014


World’s Busiest International Airport

Dubai's surge in traffic is due to

the massive A380 fleet at

Emirates

The airline has proven the A380

can be used anywhere in a

profitable way

A further increase is expected in

passenger traffic in 2015

Projected to reach 78.4m

Dubai's other airport, Al-

Maktoum International, opened

for passengers in 2013, and will

be handling 120m travellers

when completed in 2022

Country

(Total

Passenger

Volume)

2014

(M)

2013

(M)

2012

(M)

Heathrow 68.1 72.3 70.3

Dubai 70.5 66.4 57.6

62

0

20

40

60

80

2012 2013 2014

Heathrow Dubai


63

St. Valentine’s Super Deals!!!

Lufthansa offers special deals to celebrate the season

Return fare inclusive of all taxes and fees

Lagos – London From $709

Abuja – London From $761

Port Harcourt – London From $1024

Departure period Feb 06 2015 – Mar 20 2015

Return period Feb 07 2015 – Apr 20 2015

Offer last till Mar 10, 2015

Purchase Period 3 days


64

Falling Naira, Increased Fares

Preferred

Destination

Eco Class

(Dec’14) N

Eco Class

(Jan’15) N

%

Change

Biz Class

(Dec’14 N)

Biz Class

(Jan’15) N

%

Change

London 447,720 524,160 17.07% 690,440 803,320 16.35%

New York 561,044 656,832 17.07% 705,036 825,408 17.07%

Atlanta 441,160 516,480 17.07% 941,524 1,102,272 17.07%

Dubai 213,120 182,040 -14.58% 528,080 618,240 17.07%

Johannesburg 301,760 353,280 17.07% 499,200 426,400 -14.58%

Economy class down for Dubai due to price war between

Emirates and Arik

Political Risk Analysis


66

Political Update

Jonathan

“I will do better in my second term”

Believes continuity will allow for stability in the economy

PDP using all sorts to fight back

Election postponement

Interim government

Presidential debate


67

Political Update

Buhari

“$20bn missing money equivalent to Nigeria’s budget”

Could provide 840,000 patrol vehicles and 13,000MW of

power

Believes in continuity unless you are already at the edge

of a cliff

Suspicious of the elite and compromise of principles

Altercations between Ngozi and Soludo throws up questions


68

Political Update

Post-Election

Policies to remain the same

Economic damage is significant

Even the best of minds will have a hard time

The crisis of false expectations will become real

Could be a case of a pyrrhic victory

Post election violence is imminent


69

The Race Narrows – So Near Yet So Far

The APC momentum and surge is growing at a slower pace

The PDP is fighting back big time

Both parties are consolidating and energising their base

The PDP can forget the North West & North East

North Central is a battleground

The APC can forget the South East but will get the 25% in

South/South


70

Political Update

South West has the population, demography and

sophistication to be a swing zone

Osinbajo on the ticket makes it attractive to ethnocentric

Yorubas

Buhari has avoided a debate

Message is becoming clearer and is connecting

Focusing on rallies and town hall meetings

Jonathan is working tirelessly to showcase his track record


71

Deciding Factors

Exchange rate depreciation to N210 is a kiss of death

Boko Haram insurgency has become a nuisance to the PDP

Missing Chibok girls is another black eye

Oil price recovery to $57pb is great news for the PDP

The CBN defence of the naira is helping the President

Power supply unreliability is a PDP liability


72

Deciding Factors

Buhari’s ambiguity on economic reform is unsettling to the

international market

Embracing reform which is guided by economic patriotism

may douse fears

Both candidates appears numerophobic

Crisp numbers and charts are appealing to the under 30s


73

Likely Outcomes

An announced PDP landslide victory

A narrow victory for the APC with a run off

A dual result, Ivory Coast model

Election postponement


74

External Views - Eurasia Group

Short term trajectory : Negative

Long term : Neutral

Economic management would improve under Buhari

But oil production would be more at risk

A second Jonathan term would bring broad policy

continuity

But in an environment that will sharply limit the scope

for economic reform

Amidst a deteriorating security environment


75

External Views - Eurasia Group

A Buhari win offers more upside potential

On austerity and anti corruption

Security risks in the Delta region

A potential to impact oil production would be higher under

his administration

Independent of who wins the February 14 election, the

aftermath will be marked by considerable uncertainty

and unrest through March

Outlook


78

Outlook for February

J.P Morgan forecast for oil

Q1: $42pb

Q2: $43pb

Average 2015: $49pb

Long term recovery in 2019

Naira to trade at N195/$ at the interbank

N205/$ – N210/$ at the parallel market

NOPs will be increased to 1%

Stock market will remain flat to down through February

Commodity prices will slip


79

Outlook for February

Inflation will inch up to 9%

Banks will announce capital raising plans

No matter the election outcome

There will be a complete change of guards at Abuja

The policy direction, pace and enforcement will be more

defensive


80

Corporate Humour

80

Charles Wadsworth -

Women are like the police. They could have

all the evidence in the world, but still want

the confession.

- Chris Rock

By the time a man realizes that maybe his

father was right, he usually has a son who

thinks he is wrong.


81

Corporate Humour

81

Only your real friends will tell you when your

face is dirty.

Spend the afternoon. You can’t take it with

you.

- Sicilan Proverb

Annie Dillard -


82

Corporate Humour

82

It is called Rap music because the C fell off the

printer.

A homeless musician is one without a

girlfriend.

- Allan Bease

Anonymous -


83

Bismarck J. Rewane, MD/CEO Financial Derivatives Company Ltd.

Lagos, Nigeria 01-7739889

Documents

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