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The Market Today - 1 November 2017

Nigeria moves 24 spots in Ease of Doing Business Report                                                            

Nigeria moved 24 places to 145th position on the World Bank’s Doing Business Ranking, indicating the progress made by the Presidential Enabling Business Environment Council (PEBEC) in improving Nigeria’s business environment. Notably, PEBEC had targeted a 20-place jump in the rankings. Looking at specific segments, the move was largely driven by improvements in business registration (from 138th to 130th position), access to credit facilities (from 44th to 6th position), and acquisition of construction permits (174th to 147th position). Some of the PEBEC initiatives to achieve this were initiating a functioning online company registration portal and pushing through the passage of Collateral Registry Act and Credit Reporting Act as part of the 60-day National Action Plan that ran from February to April. Now, PEBEC has initiated a National Action Plan 2.0 to run for 60 days from October to December, targeted at crystallizing the improvements in Doing Business in the country, and focusing more on public procurement to strengthen the link between the private and public sectors. As the council continues its commendable work, we highlight these measures as critical quick wins for stimulating confidence and unlocking innovation and investment in the country.                                                      

Nigeria bourse climbs further, ASI up 54bps                                                      

Following a late session rally in heavyweight DANGCEM, the Nigerian stock market closed in the green yesterday as the ASI advanced 54bps. Given that sentiment on the exchange remains mixed – evidenced by the nearly flat market breadth – we expect sideways trading to persist today even as earnings season winds down.                                                    

Stock Watch: FLOURMILL released its H1’17/18 earnings yesterday, with top line coming in 17% higher y/y (₦298 billion). Also, its bottom line came in at c.₦9 billion, 45% higher y/y and 18% ahead of our estimate. Having gained 500bps yesterday, the stock currently trades at ₦31.50 and has returned 70% ytd.                                                           

Buying momentum strengthens in T-bills space pre-PMA                                                           

Maintaining its liquidity tightening position, the CBN conducted an OMO Auction yesterday, offering ₦70.00 billion across the 86DTM and 202DTM bills. Whilst the apex bank recorded no sale on the 86DTM bill, it eventually sold c.₦26 billion on the 202DTM bill at a stop rate of 17.80% (effective yield: 19.75%). Demand dominated the T-bills market yesterday as yields declined 37bps on average across the curve. In contrast, trading remained muted in the bond market, albeit with modest buying at the mid-end. We foresee cautious trading in the secondary market amidst the ₦93 billion T-bills Primary Market Auction to be held during today’s session. With healthy demand expected at the T-bills PMA (particularly on the 364DTM bill), we foresee marginal moderation in stop rates at the auction.