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The Market Today - 22nd February 2017

Nigeria set to finalize $1 billion World bank loan

The Minister of Finance – Kemi Adeosun revealed that Nigeria is set to finalize the proposed $1 billion World Bank loan which has stalled owing to delays in unveiling the Economic Recovery Plan (due February). We recall that the African Development Bank had also hinged the release of the second tranche ($400 million) of its $1 billion loan on the release of the plan. The Minister also disclosed that the China Export Import bank has offered a $1.3 billion loan to fund infrastructure development in the railway sector. According to the Minister, the economic reform agenda will be designed to deliver long-term sustainable growth, reduce reliance on oil & gas revenues and improve the efficiency of government expenditure. We see this as a positive as the government continues to seek ways to fund its budget deficit and infrastructure projects.

NSE ASI flat as NB offset broad market losses

Despite steep losses across most key sectors, the NSE ASI closed on a flat note thanks to sustained gains in Consumer Goods blue chip - NB. We see the NSE ASI potentially reversing in the session ahead even as investors could begin quick profit taking in NB.

Stock Watch: After hitting an eight-year low of ₦11.04, PZ has returned c.26% in the last seven sessions and currently trades at ₦13.88. We highlight that the stock succumbed to profit taking in yesterday’s session and could drop more points in today’s session as investors further lock in recent gains.

Yields trend northwards following CBN's SMIS

In an effort to support liquidity in the FX market, the CBN conducted Secondary Market Intervention Sales (SMIS) on Tuesday, selling a sum of $371 million. Consequently, system liquidity came under pressure, spurring sell-offs, particularly in the T-bills space. We expect trading to remain bearish at mid-week as the tight system liquidity further constrains demand.