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The Market Today - 12 February 2019

Nigerian economy grows by 1.9% in 2018

Nigeria’s Headline growth figures for FY’18 were released today, with y/y GDP printing 1.9%, narrowly beating our estimates of 1.8% y/y (IMF: 1.9% y/y) whilst Q4’18 GDP came in at 2.4%, 40bps above our 2.0% forecast for the quarter and up from the 1.8% printed in Q3’18, this is likely due to increased spending during the festive period as well as electioneering activities. Notably, average daily oil production stood at 1.91 mb/d in Q4, down from the 1.95mb/d recorded over the corresponding period in 2017 and 1.94mb/d recorded in Q3’18. The oil sector contributed 7.1% to real GDP in Q4, down from 9.4% in Q3, and aggregate GDP contribution for the year was also slightly lower at 8.6% compared to 8.7% in 2017. On a positive note, stronger growth was observed in the agricultural sector, as crop production continues to recover from the effects of social disruptions and flooding in the Middle Belt, the sector grew by 2.5% y/y in Q4, a 0.6% increase from its Q3 figure. Our forecast for 2019 remains steady at 2.7% y/y, however, we note the stronger than expected growth in the Q4 2018 and expect the mild upswing in agriculture to carry on through the year, whilst oil production remains limited due to OPEC-sanctioned cuts.

Banking stocks emerge on top as gains persist on NSE                                        

The Nigerian market posted another positive session yesterday, closing 80bps higher, led by strong upticks in the banking sector. In the same vein, market turnover remained elevated, trading ₦5.6 billion worth of shares. Market breadth widened positive with 39 advances and 10 declines. With the market sustaining positive sessions all month long, we highlight the return of strong investor interest to the market. As such, we expect another positive close in today’s session with continued interest on banking stocks.                                     

Stock Watch: Following a 5% gain yesterday, ACCESS’ share price has appreciated 25% over the past seven sessions to settle at ₦7.00. We note that ACCESS is still in the process of gaining all required approvals for its proposed business combination with DIAMOND which is scheduled to close H1’19.  

FI market turns mixed at week start                                             

The CBN conducted an OMO auction at week open, selling c.₦38 billion (₦25 billion offered) across the 94DTM, 178DTM and 360DTM bills at stop rates of 11.90%, 13.50% and 15.00% respectively (effective yields: 12.28%, 14.45% and 17.60%). Meanwhile, the Interbank Call rate advanced from 18.67% to settle at 43.33%. Amidst consistent pressure on system liquidity, we foresee further mixed trading in the T-bills space, with further yield advances likely. Meanwhile, with buying momentum appearing to slow in the bond market, we expect the bond market to remain quiet.