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The Market Today - 02 February 2018

NNPC targets PPP for pipeline infrastructure                                                    

The Nigerian National Petroleum Corporation (NNPC) has revealed its intention to leverage on public private partnership (PPP) models to upgrade Nigeria’s pipeline infrastructure. According to the Group Managing Director Maikanti Baru, strong private sector participation would help the industry build more pipelines parallel to the corporation’s existing ones. Nigeria’s mid-stream oil & gas sector has attracted greater participation in recent years, most blatantly in the form of the 650,000 bpd Dangote refinery scheduled for 2019/2020. However, pipeline infrastructure has generally remained within the purview of the Ministry of Petroleum, though there is a greater private sector role in gas pipeline infrastructure. We are cautiously optimistic that a strong PPP framework would contribute to upgrading Nigeria’s midstream oil & gas sector.                                                     

ASI ends in the green despite bearish sentiment                                                            

The Nigerian stock exchange returned to positive territory despite negative closes across most major key sectors. The green close was majorly driven by upbeat sentiment in the Industrial Goods sector. Negative sentiment persisted across most key sectors – evidenced by the negative market breadth and down trending intraday chart (save for the sharp uptick at market close). At week close, we expect a mildly negative close as bearish sentiment lingers, albeit foresee a positive w/w close.                                    

Stock Watch: DANGFLOUR has gained 14% over the last six sessions. The stock hit a five year high of ₦16.90 earlier this year and currently trades at a price of ₦16.80. It has returned 38.27% ytd.   

Slight sell pressure in bond market                                                        

The CBN conducted an OMO auction yesterday at which it offered ₦450 billion and eventually sold ₦215 billion across the 98DTM and 266DTM bills at respective stop rates of 12.60% and 14.40% (effective yields: 13.04% and 16.09%). Trading in the fixed income market was flat on the day with yields in the T-bills space moving in opposite directions. Sell pressure was more apparent in the bond market as yields on benchmark bonds advanced 6bps on average. Despite a ₦22 billion OMO maturity yesterday, we expect persistent CBN mop ups to dampen sentiment in the fixed income market at week close.