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The Market Today - 30 August 2018

Nigeria’s financial inclusion drops below SSA average                                                  

According to a recent World Bank study, Nigeria appears to have taken a step back in financial inclusion over the past three years. The data showed that bank account ownership in the country was 40% as at 2017, a mild decline from 44% in 2014, and below the Sub-Saharan Africa (SSA) average of 43%. Financial inclusion is the process of ensuring that every class of the population has access to the necessary financial products and services they need. In an increasingly global business environment, access to financial services is necessary to sustain businesses and households. Given the increasing focus of banks on digital offerings, we anticipate an improvement in inclusion over the medium to long term, as mobile and broadband penetration deepens.                                                  

Industrial Goods bears tip market to red close                                                 

"Weighed largely by losses in the Industrial Goods sector, the Nigerian equity market lost 44bps yesterday, the second negative close of the week. We expect trading sentiment to remain mixed, driven by a confluence of bargain hunting and profit seeking – in line with recent pattern – albeit with a positive tilt today.                                              

Stock Watch: Following the 556bps loss yesterday, WAPCO now trades at ₦25.50, a 2018-low and a 43% drop from its year-high of ₦56.90 – achieved in January. We believe that the sell-offs have been driven by WAPCO’s weak performances in recent quarters and thus, do not expect a reprieve for the cement major until the fundamental issues are resolved. The stock has lost 9% in the last 9 sessions and trades below consensus target price of ₦35.61.                                                      

Buying persists despite T-bills PMA                                                       

The CBN conducted a T-bills PMA where it offered and sold ₦207 billion across the 91, 182 and 364DTM bills. Amid this, liquidity fell to ₦159 billion and the Interbank call rate advanced 66bps to settle at 10.58%. Buying persisted in the T-bills space as yields declined 6bps on average. Demand was spread across the space as yields on the 92DTM and 323DTM bills moderated 80bps and 70bps to settle at 10.35% and 12.52% respectively. The bond market traded more mixed, with buying at the short-mind end accompanied by sell-offs on longer-dated instruments. Notably, whilst yield on the 14.50% FGN JUL 2021 yield declined 19bps to settle at 14.27%, yields on the 16.2884% FGN MAR 2027 and 12.49% FGN MAY 2029 bonds advanced 7bps and 5bps to settle at 14.92% and 14.90% respectively.