FREE

The Market Today - 29 August 2018

President withholds PIGB assent                                       

News report suggest that President Buhari has withheld assent of the Petroleum Industrial Governance Bill (PIGB), citing concerns that the bill erodes the influence of the presidency over the most important industry in the economy. The crucial elements of the PIGB focus on unbundling the Nigerian National Petroleum Corporation into three separate entities, reducing the powers of the Petroleum Minister, and establish a single industry regulator to replace the Department of Petroleum Resources and the Petroleum Products Pricing Regulatory Agency. The mooted changes are expected to improving regulation and governance in a sector plagued by corruption and opacity, and the PIGB was passed by the National Assembly earlier this year. The President’s refusal to sign the bill is another setback to efforts to push through necessary legislative reform to transform Nigeria’s ailing oil & gas industry.                                       

Gains persist on Nigerian Bourse as Banks rebound                                             

The Nigerian equity market remained in positive territory, with the ASI gaining 58bps driven by strong performances from blue-chips in the Banking sector as well as sustained gains across all other key sectors. Bargain hunters are expected to support another positive session on the exchange at week open, with closing positions in the market indicating sustained healthy demand levels for beaten down blue-chips.                                

Stock Watch: DIAMONDBNK has witnessed positive trading in recent sessions. After hitting a year-low of ₦1.09, the stock has rallied 18% in the past five sessions, closing at ₦1.30 in yesterday’s session. The stock is still 64% below its year-high price of ₦3.57 and has lost 13% so far for the year.                                           

Healthy liquidity spurs buy-side trading in FI market                                          

With market liquidity at ₦213 billion, the Interbank call rate declined 291bps to settle at 9.92%. Investors continued to concentrate buying on short-term investments, with yields in the T-bills market declining 17bps on average. Once again, the shorter dated maturities were the target, with notable declines in the 23DTM and 30DTM bills (-42bps and -57bps to 9.06% and 9.85% respectively). Trading in the bond market also turned upbeat, with benchmark bond yields declining 8bps on average. Demand was recorded across most maturities in the space, with yields on the 12.50% FGN JAN 2026 and 12.49% FGN MAY 2029 bonds declining 14bps and 11bps to settle at 14.81% and 14.85% respectively. The CBN is holding a T-bills PMA today, where ₦207 billion will be offered across the 91, 182 and 364DTM bills. With stop rates expected to close on par with previous auctions, we expect muted activity in the secondary T-bills space. We also expect reduced demand at the short end of the curve in the bond space, as investors remain cautious.