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The Market Today - 12 March 2019

Theresa May to present modified Brexit deal, MPs to vote                                                        

In a last-ditch attempt to avoid a “No-deal” scenario, British Prime Minister, Theresa May announced yesterday that, she had agreed changes to the initially rejected deal. This was subsequent to a series of meetings with Jean-Claude Juncker, EU president. The major changes centered around the dispute over the border between Northern Ireland and the Republic of Ireland, the most contentious issue in the Brexit debate and a major sticking point for both members of the ruling Conservative party and the opposition. Specifically, the new deal reduces the likelihood that the Irish backstop becomes permanent as some MPs believe that this could keep the UK in the common market, deleting the reason for the exit in the first place. MPs are set to vote on the modified deal later today and should the bill fail to pass, another vote will be held tomorrow on whether to proceed with a no-deal Brexit. Should that vote also fail, a vote on whether the country should extend the deadline of Article 50 will hold on Thursday. An extension to article 50 would throw the EU into further uncertainty, extending the bearish sentiment in the trade-block, further slowing global economic recovery.                                                             

Banking stocks drives negative ASI performance                                                             

The market continued on a negative path, moderating 90bps at week start, led by heavy declines in the banking sector. Notably, all sectors except Oil & Gas closed in the red. Market breadth remained negative with 20 advances and 13 declines. Following successive red closes in the market, we foresee bearish sentiment driving another negative close today. That said, we highlight possibility of bargain hunting on select stocks.                                                         

Stock Watch: WAPCO released an update on its recently concluded Right Issue announcing an acceptance of ₦89.2 billion worth of shares (100% subscribed). The stock lost 3.47% yesterday to settle at ₦12.50, trading at a year-to- date return of +0.40% (Industrial Goods: 0.90%).                                                             

T-bills market turns quiet as investors await the PMAs                                                

The CBN held-off from offering any bills in an OMO auction yesterday. Meanwhile, the Interbank Call rate advanced 166bps to 10.83%.  We expect continued tepid trading in the T-bills market as investors await the Primary Market Auction on Wednesday. Meanwhile, we foresee mild sell-offs continuing in the bond market as bearish sentiment persists.