The Market Today - 17 November 2017
FG looks towards PPP for 2018
Senator Udoma Udo Udoma, the Minister of Budget and National Planning has reiterated the importance of Public Private Partnership (PPP) agreements in completing key infrastructural projects in the proposed 2018 budget. According to the minister, the amount earmarked for certain projects only represents government’s counterpart funding and as such, may not be adequate to fully fund the projects. This comes as no surprise given the size of Nigeria’s infrastructure needs (estimated at $100 billion annually) and weak Federal Government (FG) revenue performance in recent years (75% performance in 2016). Nevertheless, we highlight the urgent need to secure concrete private interest to ensure no delays in project implementation. Finally, we note that the Senate would commence the consideration of the general principles of the 2018 Appropriation Bill next week.
NSE ASI inches into the green, up 5bps
Deviating from the bearish trend observed so far this week, the Nigerian bourse traded mixed yesterday, with the NSE ASI up 5bps. Despite the marginally positive close, market sentiment remained weak – with negative market breadth and tepid closes across most key sectors. Absent any fresh market catalyst, we anticipate a similar trading pattern at week close.
Stock Watch: DIAMONDBNK has been on a downtrend, dipping 11% in seven consecutive sessions. This retreat comes after a positive reaction to the announcement of the proposed divestment of DiamondBank SA (stock rose 21% in four sessions). The stock current trades at ₦1.09, below Vetiva target price of ₦3.43, and has returned 24% ytd.
Mixed trading surfaces amidst liquidity mop up
Amidst an OMO maturity of ₦133.16 billion, the CBN conducted an OMO auction yesterday, offering ₦120.00 billion across the 91DTM and 210DTM bills. The apex bank eventually sold ₦130 billion at respective stop rates of 16.00% and 17.80% (effective yields: 16.66% and 19.83%). The T-bills market traded mixed yesterday, albeit with a slightly bearish bias. Meanwhile, though the bond market also traded mixed, buying momentum was observed at the long end of the curve. With another liquidity mop up expected today, we believe buying will be constrained in the fixed income market as liquidity tightens.
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