Breakfast Report - 16 April, 2018
The Week Ahead
The Central Bank of Nigeria (CBN) has formally launched its Agri-Business/Small and Medium Investment Scheme by flagging off the disbursement of funds to the first set of beneficiaries. We reiterate that the scheme was developed in a bid to support the federal government’s efforts at promoting small scale agricultural businesses as a vehicle for sustainable economic development and employment generation. According to the guidelines of the scheme, each deposit money bank is to transfer 5% of its profit after tax annually to the CBN within 10 business days after the annual general meeting of the bank. The current balance of the fund stands at ₦26 billion and according to the CBN Governor Mr. Godwin Emefiele, is expected to exceed ₦60 billion by June 2018. We believe this is a well-timed initiative as it should help improve access to credit for the agricultural sector and small businesses, a unified goal of the apex bank and government in general.
Equity: The Nigerian equity market rounded off last week on a mildly positive note, gaining 29bps on Friday, thus bringing the bourse to its highest w/w gain in four weeks (+21bps w/w) and ytd returns to 7%. With green closes across all but one key sector and strong positive market breadth at week close, we expect today’s upbeat sentiment to filter into the start of next week even as participants begin to price in expectations for Q1’18 earnings releases.
Stock Watch: After 11 sessions of no price movements, SEPLAT gained 499bps on Friday. We believe this uptick was driven by announcement of an interim dividend consideration by the Board of directors – deviating from historical trend – and amidst news of the company’s addition to the Nigerian Stock Exchange Premium Board. The stock currently trades at a price of ₦698.30, below Vetiva’s target price of ₦973.68 and has returned 12% ytd.
Fixed Income: Supported by healthy system liquidity and assuming the CBN continues with the recent trend of conducting OMOs strictly to counteract liquidity inflows, we believe positive trading sentiment will persist in the fixed income market today.
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