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The Market Today - 20 July 2017

FG records ₦398 billion deficit in the month of May                                       

According to the Central Bank of Nigeria, the Federal government recorded a fiscal deficit of ₦398 billion in the month of May, bringing ytd deficit to ₦1.8 trillion, 76% of projected full year deficit of ₦2.36 trillion. The higher deficit was attributed to declining oil and non-oil revenue in the period under review, due to lower oil production and miserable tax compliance levels. We however note the upside to revenues going forward amidst improved production levels and the introduction of new tax schemes aimed at boosting compliance levels. We highlight that increasing revenue shortfalls pose a threat to budget implementation and increases the risk of overshooting borrowing target in order to fund Capex plans for the year   

NSE stretches bull run to ten sessions, ASI up 23bps                                                

"The Nigerian equity market stretched its gaining streak to ten sessions, with the NSE ASI up 23bps. With market breadth turning even yesterday amidst sell pressure on select large cap stocks, we expect mixed trading to persist in today’s session. However, we believe that the anticipated positive H1’17 earnings releases could spur more bullish trading.                      

Stock Watch: ETI has notched 19% in ten straight sessions of gains. The stock currently trades at ₦14.72 (Consensus: ₦14.82) and has returned 43% ytd.                              

Yields trend further south amidst PMA                                     

Amidst the PMA, trading remained bullish in the T-bills market with yields moderating across the space. Meanwhile, trading in the bond market turned bearish with sell pressure evident across the curve. Given the expected liquidity boost from the ₦97 billion OMO maturity due today, we expect demand in the T-bills market. However, the continued liquidity tightening measure by the CBN may dampen sentiment. For the bond space, we expect another bearish session as market demand remains tepid.