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The Market Today - 18 April 2018

IMF - World Economic Outlook points to Global growth                                                              

According to the IMF’s world economic outlook for April, global growth quickened to 3.8% in 2017 (FY’16: 3.2%) driven by a rebound in global trade, stronger growth across developed and emerging markets as well as signs of recovery in several commodity exporters. Global growth is expected to strengthen further to 3.9% this year, on the back of strong momentum from 2017, resilient commodity prices and the effects of expansionary fiscal policy in the United States. Growth in Emerging markets is also expected to quicken to 4.9% in 2018 and 5.1% in 2019 (2017: 4.8%) as commodity exporters continue to recover. Amidst this, Nigeria’s economy is expected to grow 2.1% in 2018 and 1.9% in 2019 – unchanged from previous forecast. Beyond 2019, growth in Emerging markets and developing economies is projected to stabilize at 5% over the medium term, reflecting further strengthening in economic growth. Whilst the outlook for global economies is bright, we note that heightening trade tensions as well as the rise of protectionist agenda could undercut the expectation for global economies.

Buying momentum strengthens on NSE                                                               

All but one sector closed in the green yesterday lifting the Nigerian Stock Exchange by 63bps. Sentiment in the market yesterday was positive given strong closes across key sectors and widely positive market breadth. Amidst renewed interest in Tier-1 Banking names (over ₦7 billion traded on the day), we foresee another positive trading session today.

Stock Watch: SKYEBANK has gained 48% over the last five sessions after shedding 19% in the previous eight sessions. The stock currently trades at a price of ₦0.96 and has returned 92% ytd.                                               

Bulls continue to dominate fixed income market                                                            

In the absence of a liquidity mop-up yesterday, Interbank Call rate further declined to 2.08% (previous: 2.33%). Bulls continued to hold sway in the T-bills space yesterday, with buoyant system liquidity driving yields 30bps lower on average. Sentiment in the bond market was similarly strongly positive as yields on benchmark notes moderated 29bps on average. The CBN is conducting a Primary market auction today at which it will be offering ₦73 billion across the 91DTM, 182DTM and 364DTM bills. Given the expectation of lower stop rates at the auction, we expect sentiment in the T-bills market to remain positive albeit with a more cautious trading pattern. Also, the DMO released the Bond offer circular yesterday with ₦90 billion to be offered on the 5-year, 7-year and 10-year bonds in the April bond auction.