Long-Term Potential In Stocks, Debt

Macro Outlook: We expect that due to the major challenges facing Nigeria, including domestic security concerns, a slowdown in key industries including agriculture and oil, and the global headwinds which threaten to suppress external demand for Nigerian goods, the country's growth will slow down relative to recent years, coming in at 7.1% for 2012, compared to 7.9% in 2010 and 7.4% in 2011. However, this is still quite impressive by regional and global standards, and Nigeria will remain a compelling investment destination for the foreseeable future. In terms of Nigerian assets, many of our views expressed in the last asset strategy update have played out, including a slight recovery in the currency and a bounce in the All Share equities index, although both of these are subject to risks in the weeks ahead. Local fixed income instrument yields continue a broadly downward trend, but as expected there have been some bumps along the way. Nigeria's eurobond yield continues to fall, indicating that investors are not overly concerned with domestic unrest, or even with the recent decline in oil prices, likely focusing instead on the broadly positive long-term economic outlook.

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