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The Market Today - 2 November 2017

MTN eyes six-month timeline for IPO preparations                                                       

According to the CEO of MTN Group Ltd Rob Shuter, the telecoms giant is looking at a six-month timeline for preparing for the company’s primary listing on the Nigerian Stock Exchange (NSE). In an interview on Wednesday, Shuter highlighted that the company’s advisers are “getting everything ready” as there is “a lot of regulation to be arranged”. We recall that there have been media talks about possible listing of the telecoms giant in the last few years as market stakeholders seek a deeper and more diversified equity market. We believe MTN’s listing would be a significant play for the equity market and could encourage other large private companies to follow suit. We are however cautious about the timeline for the conclusion of the listing following previous revisions, but consider it positive that the firm is actively discussing and preparing for the eventual listing.                                                             

ASI holds on to gains as key sectors advance                                                     

With all key sectors closing in the green, the Nigerian stock market remained in positive territory as the ASI rose 56bps. Whilst we note prevalence of varied sentiment in yesterday’s trading pattern, we expect renewed buying interest on select banking names to support gains on the bourse  in today’s session.                                                             

Stock Watch: DIAMONDBNK has lost 7% over the last 5 sessions after releasing poorer than expected results earlier this week – posting a 68% y/y rise in PAT, albeit lagging our estimates by 56%. The stock currently trades at ₦1.00 and has returned 14% ytd.                                                  

Fixed income yields moderate overall at PMA                                                 

The Central Bank of Nigeria conducted a Primary Market Auction yesterday, offering ₦100.84 billion across the 91DTM, 182DTM and 364DTM bills. The apex bank eventually sold ₦152.25 billion across the three maturities at respective rates of 13.10%, 15.28% and 15.60% (effective yield: 13.54%, 16.54% and 18.47%), slightly lower than the last PMA. With investors anticipating the lower stop rates at the PMA, demand continued to dominate the T-bills market yesterday as yields moderated 24bps on average. Also, the bond market turned slightly upbeat as yields on benchmark bonds declined 4bps on average. We expect the CBN to continue with its aggressive liquidity mop-ups (through OMO auction) even as ₦102 billion worth of OMO bills is scheduled to mature today. Whilst we foresee further demand in the T-bills market (as yields moderate towards auction levels), trading on bonds is expected to be mostly quiet.