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The Market Today - 10 September 2017

Vice President reemphasizes private sector drive                                                          

The Vice President Yemi Osinbajo gave the keynote address at the FT Africa Summit held in London yesterday. In his speech, he emphasized how the Federal Government (FG) has come to terms with “the limitations of government, in cash and capacity, to run businesses”. Notably, he explained how this renewed respect for the private sector underpins recent initiatives ranging from the planned concession of major international airports and the eligible customer directive issued by the National Electricity Regulatory Commission in August. Further to this, the FG is looking to build on the modest success of the 60-day national action plan on Ease of Doing Business earlier this year by initiating a follow-up 60-day action plan that will commence this month. The program, which is targeted at boosting the efficiency and productivity of private sector businesses, and deepening transparency in the public sector, will cover 11 areas of focus, compared to 8 during the first program. We reiterate that Ease of Doing Business initiatives are under-appreciated and potentially impactful ways of unlocking Nigeria’s productivity potential and attracting patient capital into the country.                                                             

Bulls rule the Nigerian bourse at week open                                                     

Sustaining its positive performance from last week, the Nigerian Equity Market posted gains of 141bps at week open, with all key sectors closing in the green. Given the strong buying sentiment at week open, seen in the positive market breadth and strong green closes across key sectors, we anticipate another positive trading session today.                                                           

Stock Watch: ZENITHBANK has advanced 14% on a nine-session bull run. The stock currently trades at ₦25.25, below Consensus target price of ₦28.22, and has returned 71% ytd.                                                     

Tight liquidity caps activity in Fixed Income market                                                       

The CBN conducted an OMO auction yesterday, offering ₦20 billion and ₦50 billion across the 101DTM and 178DTM bills respectively.  Trading in the T-bills market was relatively mixed with mild bearish sentiment at week open as yields on maturities trended in opposite directions. In the bond market, trading was varied with a bearish bias as well, as yields rose 3bps on average across the benchmark bonds. Whilst the near term direction for fixed income securities remains southwards, we expect the tightened system liquidity to keep sentiment largely muted in the next session, albeit with sparse demand on select bills.