The Market Today - 04 October 2018

World Bank cuts sub-Saharan Africa’s 2018 growth forecast World Bank cuts sub-Saharan Africa’s 2018 growth forecast The World Bank has revised its 2018 economic growth forecast for Sub-Saharan Africa from 3.1% to 2.7%, citing slower-than-expected growth in the region’s biggest economies (Nigeria, Angola, and South Africa). World Bank Chief Economist for Africa, Albert Zeufack said that the slow growth is a reflection of a less favorable external environment, coupled with Nigeria and Angola’s oil production challenges which have offset gains from rising oil prices. The Bank downgraded its 2018 growth projections for South Africa from 1.4% to 1.0% and for Nigeria from 2.1% to 1.9% (Vetiva: 1.7%). The downgrade reflects the underwhelming growth recorded in the first half of the year and persistent challenges in the agriculture sector. DANGCEM weighs on Nigerian bourse, ASI down 79bps The Nigerian bourse continued the week in negative territory, with the ASI dropping 79bps after a mid session plunge in DANGCEM dragged the index.  Market breadth turned positive with 15 advances and 14 declines. Save for a mid session dip in DANGCEM, market sentiment was largely mixed yesterday amidst weak investor appetite. Thus, we foresee another tepid session today, albeit with a negative bias.
Stock Watch: FIDELITYBK has gained 14% over the last six sessions. This comes after the bank released positive H1’18 results with top line and bottom line printing at N89 billion (+4% y/y) and N12 billion (+31% y/y) respectively. The stock currently trades at N1.85 and has declined 25% YTD.       
PMA auction indicates lower stop rates The CBN conducted a PMA yesterday, selling ₦438 billion (₦134 billion offered) across the 91DTM, 182DTM and 364DTM bills at respective stop rates of 10.90%, 12.098% and 13.33% – below stop rates at the previously conducted PMA and current secondary market levels. While system liquidity remained healthy at c.₦477 billion, the Interbank call rate declined 58bps to 4.25%. Trading across the T-bills market yesterday was mixed, with yields declining a mere 2bps on average. Notably, whilst the yield on the 162DTM bill declined 56bps to settle 13.03%, the yield on the 344DTM bill advanced 89bps to settle at 15.28%. On the other hand, the bond market saw a generally positive day albeit with some sell pressure on select maturities. Whilst the yield on the 12.1493% FGN JUL 2034 bond declined 12bps to settle at 15.09%, the yield on the 16.2499% FGN APR 2037 bond advanced 6bps to settle at 15.22%. Driven by healthy liquidity and lower PMA stop rates, we expect improved buying activity in today’s session.