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The Market Today - 14 September 2017

Nigeria records surplus balance of trade for Q2’17                                       

The National Bureau of Statistics released the Second Quarter Foreign Trade in Goods report, showing a rise in imports from ₦2.3 trillion in Q1’17 to ₦2.6 trillion in Q2’17 and a rise in exports from ₦3.0 trillion in Q1’17 to ₦3.1 trillion in Q2’17. The rise in exports was primarily driven by stronger crude exports (₦2.4 trillion vs. ₦2.3 trillion in Q1’17) as the commodity accounted for 78% of total exports in the period. Nevertheless, the stronger growth in imports saw the balance of trade recede from a surplus of ₦0.7 trillion in Q1’17 to ₦0.5 trillion in Q2’17. Despite this, we foresee further improvement in the coming quarters, bolstered by still-recovering oil production (July estimate: 2.05 mbpd – the highest in over a year), as well as relatively healthier oil prices.                                  

Equity market halts downtrend, ASI up 19bps                                    

Though sentiment on the Nigerian bourse remained visibly mixed, market closed in the green for the first time this week, as the All-Share Index notched 19bps. With yesterday’s mildly positive close driven by a last-minute spike in two large cap stocks, we believe sentiment on the exchange remains varied and expect the mixed trading to persist in today’s session.                                 

Stock Watch:  PRESCO has shed 11% over the last four sessions. We highlight that the stock hit a five-year high of ₦76.59 last month and has been on a downtrend since then. The stock currently trades at ₦60.80 and has returned 52% ytd.                                       

T-bills market turns mixed ahead PMA auction result                                               

The CBN conducted a Primary Market Auction yesterday, offering ₦135 billion across the 91DTM, 182DTM and 364DTM bills. Despite this, Inter-Bank Call rate declined 67bps yesterday to 19.33%.  Sentiment was mixed (with a bearish bias) in the secondary market with T-bills yields rising 12bps on average – particularly around the short-mid end of the curve. Meanwhile, there was a mild resurgence in demand across the bond market yesterday as yields on benchmark bonds declined 13bps. Whilst we expect the CBN to resume mop ups today via an OMO auction, we believe the ₦159.68 billion OMO maturity coming in today would strengthen investor demand across the T-bills space.