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The Market Today - 13 October 2017

World Bank highlights importance of Human Capital                                     

Following the release of the World Bank Africa Pulse which disclosed that economic growth in Sub-Saharan Africa – projected at 2.4% for 2017 – was recovering at a slow pace, the World Bank called on African leaders to implement the necessary reforms to insulate their economies from global shocks. Speaking on Nigeria, World Bank President Jim Yong Kim advised the Federal Government (FG) to recalibrate its development strategies by investing in human capital rather than focusing its energies on the oil industry. He stressed that Nigeria’s recent GDP growth was weak and with latent uncertainty around global oil prices and insecurity in the country, critical long-term investments must be made to engender growth. We note that the World Bank recently trimmed its 2017 GDP growth forecast for Nigeria from 1.2% to 1.0% (IMF: 0.8%), citing weak investment and productivity. With the oil equation remaining positive for Nigeria, we consider the country to be on the path to marginally surpass this target (Vetiva: 1.1%).                             

All Share Index retraces losses notching 22bps                                             

Amidst an improvement in investor participation, the Nigerian bourse bounced back yesterday with the NSE ASI gaining 22bps. Whilst mixed sentiment persists on the Nigerian bourse, we believe the mildly bullish bias seen yesterday will persist in today’s session and foresee a positive w/w return for the NSE ASI at week close.   

 Stock Watch: TRANSCORP has gained 741bps for the past four consecutive sessions. The stock currently trades at ₦1.45 and has returned 66.67% ytd.

FI yields trend southwards as week winds down                                           

Amidst a ₦61.59 billion OMO maturity, the CBN conducted an OMO auction yesterday, offering ₦20 billion and ₦40 billion on the 98DTM and 196DTM bills respectively. Whilst the apex bank made no sale on the 98DTM bill and it sold c.₦64 billion on the 196DTM bill at a stop rate of 17.85% (effective yield: 19.74%). Despite the liquidity mop-up, yields trended lower in the T-bills market, declining 7bps on average. Likewise, demand remained healthy in the bond market as yields on benchmark bonds moderated for the third consecutive session, declining 9bps on average. We expect further demand in the T-bills market at week close barring another OMO auction that could strain system liquidity further. In the bond space, we foresee continued buying sentiment as investor demand remains healthy.