Breakfast Report - 14 January, 2019
The Week Ahead
The CBN has conducted a review of its current Financial Inclusion strategy aimed at identifying bottlenecks to a truly financially inclusive Nigeria. Currently, 58.4% of Nigeria’s adult population have access to basic financial services as opposed to the apex bank’s target of 70% by 2020. Following the review, the bank determined that the current regulatory environment is not flexible enough to accommodate the technologies needed to drive inclusion. The CBN also identified bottlenecks such as reliance on obsolete technology, fixed fees across all transactions, poor adoption of mobile money and agent banking services, security issues as well as cultural and religious barriers in the Northern region. The bank recognized the need to create a more suitable regulatory environment and plans to work with other MDAs as well as private sector to ensure a more enabling environment for banking in Nigeria.
Equity: In spite of a 106bps d/d uptick at week close, the ASI posted a 264bs w/w decline following three consecutive red closes last week. With investor apathy dampening activities, we do not think that Friday’s positive close indicates a convincing reversal in trend. Therefore, we anticipate mixed trading at the start of this week, but with a negative tilt.
Stock Watch: Following four straight red closes, FIDELITYBK has gained in the last three consecutive sessions, initially losing 8% before a cumulative gain of 11%. The stock last traded at ₦2.00, down 1.5% in 2019.
Fixed Income: Last week, the CBN sold c.₦310 billion (₦460 billion offered) in two OMO auctions at stop rates of 11.90%, 13.50% and 15.00% respectively across 3 maturities. The apex bank also sold ₦46 billion at a special OMO on the 364DTM bill. Meanwhile, the Interbank Call rate remained flat at 20.00%. We anticipate continued mixed trading in the FI space as the CBN maintains its tight monetary stance.
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