The Market Today - 21 April, 2017
​Finance Minister echoes need to grow non-oil revenues
The Minister of Finance, Kemi Adeosun, at the World Bank and IMF spring meeting reiterated the need to improve Federal Government’s (FG) non-oil earnings, particularly tax revenues. She further stated that Nigeria’s tax to GDP ratio (c.6%) remains one of the lowest in the world. Also commenting on Nigeria’s debt profile, she noted that whilst Nigeria’s debt to GDP is quite low at c.15% (Fiscal Responsibility Act threshold: 19.4%), the Achilles heel remains the proportion of revenue being spent on debt servicing. She highlighted that debt servicing to revenue ratio remains elevated in 2017 as the FG expands debt amidst a low-oil price environment. Whilst we acknowledge that a sustainable fix to revenue growth is to improve non-oil revenues, we highlight that the process requires time and sheer political will.
NSE ASI retreats as mixed trading persists
Amidst relatively thin trading volumes, sentiment on the Nigerian bourse sustained a mixed pattern, albeit with a slightly bearish bias as the NSE ASI slipped 17bps. We believe this trading pattern will persist at week close, noting that market breadth remained relatively even for the second consecutive session.
Stock Watch: NB announced its Q1’17 result after market close yesterday with Revenue and PAT growth of 18% and 10% respectively. Both line items also came in 12% and 37% ahead of Bloomberg consensus. NB currently trades at ₦124.00, down 16% ytd.
Bulls return to market amidst OMO auction
Trading in the bond market was relatively quiet with modest moderations observed on select benchmark maturities. Meanwhile, the T-bills market reversed its bearish trend to trade mixed with a slightly bullish bias. With yesterday’s maturities supporting liquidity and buoying investor appetite, we foresee stronger buying momentum in the fixed income market at week close.
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