Breakfast Report - 22 October, 2018
The Week Ahead
The World Bank released a report on Doing Business in Nigeria which measures the progress of the 36 states and FCT in four key business regulatory areas and the bank found that no single Nigerian state dominates the indicator rankings across all benchmarked areas. The findings state that 29 Nigerian states implemented 43 reforms across starting a business, construction permits, registering property and enforcing contracts, with Kaduna, Enugu, Abia, Lagos and Anambra showing the largest advances toward the global good practice frontier. Most reforms were driven by the federal government in the areas of starting a business, part of the “ease of doing business’ objective of the current administration. It is the view of the World Bank that state governments must take a more proactive approach in implementing federal reform initiatives but must also create and implement reforms in areas under state control, as this will be the key to improving Nigeria’s business environment.
Equity: In an even split between sector gainers and losers, the All-Share Index closed 54bps higher on Friday and +119bps up w/w, the second positive week in a row. Meanwhile, activity levels dropped in Friday's session, with market turnover falling to ₦1.5 billion. Although performance was positive at week close, market breadth stayed negative, with investor sentiment favouring sell-side activity. Therefore, we anticipate a mixed start to this week’s trading.
Stock Watch: OKOMUOIL released its 9M’18 results on Friday, with top and bottom line coming in line with our estimates, albeit up 1% and 13% y/y respectively. The stock has returned 18% year-to-date and currently trades at a price of ₦79.80.
Fixed Income: On the back of constrained liquidity following the OMO and PMA auctions, we expect bearish trading in the T-bills space to start the week. Meanwhile, following the release of the October bond circular which indicates an increase in bond supply, we foresee tepid trading in the bond space.
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