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The Market Today - 28 August 2018

UK Prime Minister heads to Africa, targets investment leadership                                                         

British Prime Minister Theresa May will meet the presidents of South Africa, Nigeria and Kenya on a 5-day trip, her first official visit to Africa since she took office in July 2016. According to reports from the Prime Minister’s office, discussions will be centered on post-Brexit trade opportunities as the United Kingdom aspires to be the largest G7 investor in Africa by 2022. On the topic of emigration to the UK, the Prime Minister’s office highlighted the UK’s willingness to work with African leaders to boost and create jobs to help stem migration flows. We note that the UK is a strong exporter of capital to Nigeria, but foreign direct investment remains weak. Foreign investments in Nigeria will be a boost for the economy and we expect the proposed investments by May to support further growth in the Nigerian economy.                                                         

ASI experiences see-saw movement as Industrials falter                                                            

"The Nigerian bourse got off to a negative start on Monday with the ASI shedding 32bps. As was the case last week, movement of the ASI was majorly dictated by the Industrial Goods sector, noting that all other key sectors posted green closes on the day. Whilst the see-saw movement in the NSE ASI over the past few sessions has been primarily driven by DANGECM, broader market sentiment appears less downbeat at week open and as such we foresee a mixed trading session today with ASI possibly securing a mildly positive close.                                                   

Stock Watch: UBA has recorded a 16% decline so far this month, with the stock falling to a year-low of ₦8.00 on Friday its lowest price this year, the stock recorded a 188bps gain in yesterday’s session amidst bargain hunting and the bank is to release its H1’18 before the end of the month.                                    

T-bills market boosted by short-term buying                                                    

The interbank call rate advanced 608bps to 12.83%. Despite this, buying was observed in the T-Bills space, with yields declining 10bps on average and demand focused on shorter dated maturities. Of note, yields on the 17DTM and 24DTM bills declined 58bps and 80bps to 11.63% and 9.48% respectively. Meanwhile, the bonds space was bearish, as yields on benchmark bonds rose 6bps on average, with selling focused on mid-dated securities. Yields advanced on the 12.50% FGN JAN 2026 and 13.98% FGN FEB 2028 bonds advanced 16bps and 17bps to settle at 14.96% and 14.95% respectively. We expect relatively healthy system liquidity to support demand on T-bills, but foresee another tepid session in the bond space amid weak investor appetite for long-term instruments.