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The Market Today - 12 December 2017

Current account balance hits three-year high                                                    

According to the National Bureau of Statistics, Nigeria recorded a current account balance of ₦1.2 trillion – the highest since Q3’14. Total exports stood at ₦3.6 trillion, 13% and 35% higher than Q2’17 and Q3’16 respectively, driven by a rise in crude oil exports. With crude oil accounting for 83% of total exports, we attribute this rise to stronger oil volumes in the quarter – Q3’17 average: 2.0 mb/d vs Q2’17 average: 1.9 mb/d as well as a stable oil price. Meanwhile, total imports came in at ₦2.3 trillion, 11% lower q/q and 5% lower y/y. The moderation in imports was driven by lower imports of energy goods and petroleum products during the period, despite a rise in manufacturing and agriculture imports. As oil production remains stable and given stronger oil prices in recent times, we anticipate an even better current account performance in the final quarter of 2017.                                                            

Sell offs continue at week open                                                              

The Nigerian bourse began the week as it ended the previous one with the NSE ASI shedding 88bps in a broadly bearish trading session. With profit taking still evident on blue chip names after the recent seven-session bull-run, we anticipate further bearish trading in today’s session.                                                      

Stock Watch: FBNH has gained 32% over the last nine sessions. The stock currently trades at a year high of ₦9.10, above Vetiva’s target price of ₦8.64 and has returned 172% Ytd.                                                              

                                                               

 Fixed Income market bull-run carries on                                                            

With the CBN maintaining it’s decision to pause OMO auctions, Interbank Call rate declined further to 3.25% (Previous: 5.17%) – lowest since mid-July. Yields trended further southwards at week open as bullish sentiment continued to dominate the fixed income space. Specifically, yields in the T-bills market declined 70bps on average. Likewise, yields on benchmark bonds declined 11bps on average. Amidst steady system liquidity (c.₦78 billion), we expect demand for fixed income securities to remain healthy in today’s session even as the CBN continues to hold off on OMO auctions.