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The Market Today - 13 June 2017

Presidency approves 2017 budget
Yesterday, Ag. President Yemi Osinbajo signed the 2017 budget into law. The record budget of ₦7.44 trillion was expected to be approved in May but was delayed due to changes in the proposal sent to the National Assembly. We highlight that the budget has consistently been signed late in the last four years with budget implementation being relatively weak. The presidency however announced that the 2018 budget would be submitted to the National Assembly by October and the process would be completed by December to ensure Nigeria returns to a normal budget cycle. We note that with economic parameters improving in recent times – slower GDP contraction, over-50 PMI readings – the pace of capital disbursements would be key to cementing Nigeria’s economic recovery and possibly lead the country out of recession.

ASI halts bullish run at week open, down 12bps
After racking up gains in the previous week, the NSE ASI retreated at week open as intensified profit taking across key sectors overtook softer buying sentiment. Given the largely bearish trading pattern (ASI down as much as 100bps intra-day) and negative closing positions on the exchange, we anticipate further selloffs in today’s session.

Stock Watch: Riding high on the positive banking sector momentum, ACCESS extended gains to eleven-sessions after adding 346bps yesterday. The Tier-I bank currently trades at an over three-year high of ₦10.76 and a premium to consensus target price of ₦8.46. The stock has gained 83% ytd.

Bearish start to the week for fixed income securities
Amidst the liquidity squeeze, trading in the T-bills market opened the week bearish, with yields advancing 17bps on average. The bond market was similarly bearish with yields advancing across most maturities. We expect pressured sytem liquidity to further cap demand in the T-bills space in today’s session even as traders take positions ahead of the Primary market auction on Wednesday.