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Breakfast Report - 01 April, 2019

The Week Ahead                                                                            

The Minister of Budget and National Planning, Udoma Udo Udoma, stated plans of the Federal Government to revert to the old budget cycle which ran from January to December. The trend of late passage of the budget has been consistent, with the earliest appropriation bill passage in recent times being the 2013 budget which was passed in February. Subsequently, the 2014, 2015 and 2016 budgets were all passed in May, while the 2017 and 2018 budgets were passed in June. This trend has also persisted with the 2019 budget, with the bill still undergoing readings in the Senate. Udoma has stated that the delay in submitting and passing the 2019 budget was caused by “relegated governance” by both the executive and legislative arms of government amid the 2019 election season. He further expressed the executive’s willingness to comply with the provisions of the Fiscal Responsibility Act 2007 by submitting the Medium-Term Expenditure Framework and Fiscal Strategy Paper to the National Assembly on time. We highlight that the delay in signing the appropriation bill has been a major reason for weak implementation of capital expenditure (17% as at October 2018), a major setback to economic growth.                                                                

Equity: In its first significantly positive session of the week, the NSE ASI gained 67bps on Friday, moderating last week’s losses to 31bps. We expect trading this week to resume mixed, with a positive tilt as investors react to company performances.                                                                 

Stock Watch: CCNN released its FY’18 results on Friday, posting topline and bottom line figures of ₦31.7 billion (+62% y/y) and ₦5.7 billion (+78% y/y) respectively. The stock gained 4.74% to settle at ₦19.90, 2.58% above its year open price.                                                                    

Fixed Income: Barring any OMO auction at week open, we expect further demand in the T-bills market, driven by healthy system liquidity. Meanwhile, we foresee the bond market opening this week on a quiet note, with mild sell-offs expected later in the week.