The Market Today - 15 May 2018
Petrol prices moderate further in April
Data from the National Bureau of Statistics (NBS) showed that average petrol prices continued to moderate in the country in April, falling to ₦151.40 from ₦163.39 in March. Petrol prices have been trending down since the start of the year (₦190.87 in January), driven by strategic intervention by the Nigerian National Petroleum Corporation (NNPC) to ensure adequate product supply in the country. Average daily NNPC truckout has risen from 37 million litres in December 2017 to 52 million litres in April 2018. We recall that the rise in global crude oil prices from 2017 had pressured petroleum imports and caused product shortages and a spike in prices at the turn of the year. With global crude oil prices forecast to remain high (Vetiva 2018F: $65/bbl), NNPC intervention remains key to maintaining adequate petroleum supply at prices near the regulated band.
Bearish session to kick-off the week
After a brief recovery at the end of last week, the Nigerian bourse reverted to its negative trading pattern, shedding 84bps yesterday amid declines across nearly all key sectors. Widely negative market breadth and negative intraday trading point to the prevailing bearish sentiment in the market. We expect this to filter into today’s session given the sustained pressure on key sectors.
Stock Watch: ETERNA has gained 22% in the last six sessions and now trades at N7.00, a five-year high. We note that ETERNA has returned 72% ytd, making it the 6th best performing stock on the exchange.
Market opens bearish amid tight liquidity
Amid tight system liquidity on the back of outlflows late last week, Interbank call rate raced to 150% (previous: 65%). The fixed income market opened the week on a relatively bearish note, pressured by tight system liquidity. Yields rose 34bps on average in the T-bills space with yields on the 31DTM (+104bps to 14.39%), 136DTM (+266bps to 13.71%) and 325DTM (+88bps to 15.01%) bills notching sizable advances. The bond market was likewise negative with sell pressure weighted on the long-dated maturities. We expect tight system liquidity to continue to constrain buying in the market today.
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