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The Market Today - 15 February 2019

January Inflation remains flat despite rise in core inflation                                            

According to the recently released CPI report from the National Bureau of Statistics, Nigeria’s inflation came in at 11.4% y/y in January, unchanged from the previous month but slightly below Consensus and Vetiva forecast of 11.5% y/y. Similarly, month-on-month (m/m) inflation also remained flat at 0.7%. Notably, the food price index rose at a slightly slower rate in the month at 13.5% y/y, compared to 13.6% y/y in December. Meanwhile, after staying flat for two straight months, Core Inflation rose to 9.9% y/y (December: 9.8% y/y). More significant for Core Inflation is the sharp rise in m/m inflation, from 0.5% in December to 0.8% in January. Despite the benign movement in headline inflation, we foresee stronger showings in the coming months, particularly following the implementation of the proposed c.67% minimum wage increase.                                        

Nigerian market sees mild advances amid mixed trading                                    

The ASI advanced 12bps yesterday amid continued mixed trading and an even split between gaining and losing sectors. Notably, with the NSE30 Index closing 2bps lower, we believe gains across smaller-cap stocks were responsible for the mildly positive performance of the broader index. Market breadth turned positive with 22 advances and 19 declines. In the final session before the elections, we expect to see further varied activity on the Nigerian bourse driven by a mix of caution and optimism as the long-awaited elections finally take place.                                          

Stock Watch: Following a 7% gain in yesterday’s session, WEMABANK has now gained 38% in the last 7 sessions to settle at ₦0.95, a 50% return ytd and its highest price since April 2018.                                       

Quiet session after CBN maintains rates at OMO auction                                    

Amid a ₦630 billion OMO maturity, the CBN sold ₦507 billion (₦650 billion offered) across the 91DTM, 175DTM and 364DTM bills at stop rates of 11.90%, 13.50% and 15.00% respectively (effective yields: 12.26%, 14.47%, 17.64%). Meanwhile, yields in the T-bills market continued to move in opposite directions, with yields mostly advancing at the short-end of the curve and declining at the long-end. However, trading in the bond space was slightly positive, with average benchmark yields moderating 2bps. In line with its tight monetary stance, we expect the CBN to conduct another OMO auction today and foresee another mixed session in the FI market.