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The Market Today - 28 March 2018

National Assembly shifts deadline for 2018 budget passage
The National Assembly has shifted the deadline for the passage of the 2018 budget to May 31, from the earlier April 24 timeline. We recall that President Buhari had presented the 2018 Appropriation bill to the National Assembly in November 2017 and hoped that the legislative would take advantage of the early presentation to return Nigeria to a normal budget timeline. However, with both legislative houses attributing the delay in approval to the hesitation of Ministries, Departments and Agencies to defend the budget proposals, we are most likely on track for another long delay in passage – a trend that have persisted in recent years. We note that despite the expansionary fiscal plans of the government, delayed passage will continue to adversely impact budget implementation – particularly as it relates to capital expenditure needed to spur economic recovery.

NSE ASI down 51bps as selloffs intensify
The Nigerian Equity Market lost 51bps yesterday, with all key sectors save for the Industrial Goods sector closing in the red. Evident from negative market breadth and intraday trading, sentiment on the market remains largely bearish and continues to dominate trading activities. We expect this sentiment to filter into today’s session.

Stock Watch: CCNN released its FY’17 results with top and bottom line up 39% to ₦20 billion and 157% to ₦3 billion. The Group proposed a final dividend of ₦1.25, contrary to our expectation of no dividend. The stock currently trades at a price of ₦19.65 after gaining 480bps yesterday and has returned 107% ytd.

Sell pressure continues to weigh on bond market
With the Central Bank of Nigeria pausing its OMO auction for another session yesterday, Interbank Call rate declined to 20.17% (previous: 43.33%). Sentiment in the T-bills market remained mixed yesterday with yields trending in opposite directions. Meanwhile, trading in the bond market was largely bearish with sell pressure remaining weighted towards the short-mid end of the curve. Following this, yields on benchmark bonds advanced 7bps on average. We expect the tight system liquidity to sustain mixed to bearish trading in the FI market, with the CBN holding back on its mop-ups. However, should the expected liquidity inflow from FAAC come in today, we expect modest improvement in sentiment.