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The Market Today - 20 June 2017

FG set to release first tranche of 2017 capital spending plan
Barely a week after the signing of the 2017 budget, the Minister of Finance, Kemi Adeosun stated that the Federal Government is set to release ₦350 billion (of the ₦2.36 trillion capital allocation in 2017 budget) as the first tranche for capital disbursement of the 2017 budget. Whilst the timing of the release is not necessarily an improvement over 2016, we still find it quite important particularly in this period where fiscal stimulus is needed to keep the expected economic recovery on track.

In addition, Nigeria has successfully completed the issue of her first diaspora bond, raising $300 million at a coupon rate of 5.625%. The retail bond generated significant interest from Nigerians in diaspora, with oversubscription reported at 130% by the media. The successful completion and oversubscription reinforces the consensus belief of returning investor confidence in the Nigerian economy and provides another option for external financing.

Nigerian equity market opens the week positive
Following a positive close last week, the Nigerian equity market opened the week in the green with the ASI up 96bps following mostly mixed trading lifted by a late surge in heavyweight DANGCEM. We expect further mixed trading in today’s session as profit taking could cap the general buying sentiment seen in the market.

Stock Watch: Yesterday, JBERGER announced a strategic partnership and joint investment agreement with Petralon Energy Limited for the acquisition and development of oil fields in Nigeria. This partnership is in line with the company’s plans to diversify into the Oil & Gas sector. The stock rose 63bps yesterday and has returned 3% ytd.

T-bills market trades mixed at week open
Whilst the bond market remained rather quiet, notable selloffs were recorded on select tenors. Meanwhile, trading in the T-bills space was mixed with selloffs observed at the short end as dealers sold short dated maturities to fund dollar purchases. Whilst we expect trading in the T-bills market to remain mixed (with a bearish bias) on account of tight system liquidity, we expect the bond market to remain relatively quiet even as traders begin to take positions ahead of the monthly bond primary market auction on Wednesday.