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The Market Today - 10 May, 2017

IMF maintains cautious economic outlook on SSA                                          

In its Regional Economic Outlook for Sub-Saharan Africa (SSA), the International Monetary Fund (IMF) maintained its GDP growth forecast for the region – 2.6% in 2017 and 3.5% in 2018. The Fund expects SSA economic growth to lag global growth for the next two years (Global forecasts: 3.5% in 2017 and 3.6% in 2018) as growth in the region’s largest economies (Nigeria, South Africa, and Angola) remains below historical levels. The fund also expects SSA inflation to remain double digits in 2017 (forecast of 10.7% vs. 11.4% in 2016) as recent currency depreciation weighs on domestic prices. Overall, the Fund recommends fiscal adjustment and exchange rate flexibility as key tools for resource-intensive countries in the region to accelerate their growth efforts.                                

Nigerian bourse retains bullish sentiment                                            

Extending its gaining streak to eight consecutive sessions, the Nigerian equity market notched 128bps, supported by persistent buying sentiment across most key sectors. With a handful of stocks in the bid cart at the close of trading yesterday, we expect the ASI to stretch gains today, with ytd returns possibly turning positive. Global stock markets touched record highs yesterday as investors’ sentiment was bolstered by solid corporate earnings and result of the French presidential election.                       

Stock Watch: OANDO is presently on a six-session bull run and has gained 10% apiece in the last two sessions. With a closing price of ₦8.69, OANDO has gained 85% ytd, and is trading at an 18 month high.          

Market trades mixed ahead of bond auction                                       

The Central Bank of Nigeria (CBN) conducted an OMO auction yesterday, offering ₦40 billion across the 163DTM and 359DTM bills. The apex bank eventually sold ₦15 billion on the 359DTM bills at a stop rate of 18.60% (effective yield: 22.76%). Despite the mop-up, Interbank Call Rate eased 167bps to 15.00%. We expect to see cautious trading ahead of the May bond auction where the DMO would be offering ₦140 billion across 5-year, 10-year and 20-year tenors