The Market Today - 25 April, 2017
​PFAs to restructure funds in new PenCom regulation
The National Pension Commission (PenCom) published amendments to regulations on investment of pension fund assets. Most notably, PenCom introduced a multi-fund structure for Pension Fund Administrators (PFA) and Retirement Savings Account (RSA) funds. The multi-fund structure shall comprise of Fund I, Fund II, Fund III and Fund IV and will differ according to their risk profile and overall exposures to variable income instruments such as Equities, Real Estate Investment Trusts (REITs) and Private Equity funds. The regulator also stipulated maximum and minimum investment exposure thresholds for the funds, specifying a six-month window for compliance. We highlight that the amendments to the investment guidelines demand more allocation to equity and other variable income instruments. Consequently, we foresee increased investor interest in the above mentioned investment vehicles.
NSE ASI soars as bellwether stocks rally
Amidst investor reaction to positive earnings releases, the NSE ASI (up 221bps) soared to a rare three-digit gain at week open even as a host of blue chip stocks racked up strong gains. We highlight the strong investor interest towards a handful of bellwether stocks across sectors at week open. We believe this would keep the NSE ASI in the green in the session ahead.
Stock Watch: After the release of a disappointing FY’16 result that saw ETI dip to a 5-year low following six straight sessions of losses, the stock gained 493bps at week open as bargain hunters swooped in.
STANBIC gained 498bps following market reaction to its Q1’17 earnings announcement (PAT rose 106% y/y and 81% above Bloomberg estimate), extending its winning streak to seven-sessions. With a closing price of ₦21.49, the stock has gained 43% so far this year.
Yields continue south at week open
Continuing the momentum from last week’s close, the fixed income market traded largely bullish today after a sluggish start. We expect another relatively buoyant session today, albeit tempered by liquidity pressure from today’s expected FX sale.
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