The Market Today - 17 May, 2017
Public-Private-Partnership
needed to plug infrastructure gap
Nigeria’s Minister of
Finance, Kemi Adeosun reiterated that the country’s sizeable infrastructure gap
cannot be adequately addressed through Federal Government (FG) capital
expenditure (capex). Nigeria’s infrastructure stock is c.35% of its GDP
compared to an average of 70% for emerging market economies. Meanwhile, power –
a crucial cog in infrastructure – was highlighted as the second biggest
obstacle to doing business in Nigeria by the World Bank in 2014. In light of
this, the FG has renewed its commitment to capex, outlining a minimum 30%
budgetary allocation each year. Both the 2016 and 2017 Budgets satisfy this
rule though actual capex spend in 2016 fell way short on account of a delayed
budget passage and funding challenges. Nigeria may need $100 billion a year to
address its infrastructure needs, and the Minister stressed the need for
private sector support through public-private-partnerships. We highlight that
this is in line with the theme of the Economic Recovery & Growth Plan which
seeks to unlock greater private investment by creating an enabling environment
for strong private sector growth. We are optimistic about this approach,
considering the importance of infrastructure for driving productivity and
economic growth.
ASI
bounces back, up 35bps
Following a two-session sell
offs amidst broad-based profit taking, the Nigerian equity market bounced back
yesterday (NSE ASI up 35bps) following turnarounds across most key sectors.
Notwithstanding the turnaround, we highlight persistent profit taking on a handful
of stocks and foresee a mixed trading session today.
Stock
Watch: After losing 536bps in four consecutive sessions, UBA
currently trades at ₦6.60. The stock has returned 47% ytd
Market
turns bearish amidst high inflation print
The fixed income market traded
bearish yesterday amidst a higher than expected April Inflation print of 17.2%
(Bloomberg Consensus: 16.9%). In particular, yields rose across the T-bills
space ahead of today’s Primary Market Auction. We expect cautious trading ahead
of the auction where the CBN would offer ₦111 billion across the 91DTM, 182DTM
and 364DTM bills.
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