FREE

The Market Today - 30 November 2017

Economic recovery sustains positive month on ASI                                                        

With just one session left in the month, the Nigerian equity market has returned 281bps for the month with all key sectors closing in the green. Mixed sentiment trailed this month amidst investor reaction to a flurry of earnings releases as well as broadly positive economic news such as Nigeria’s Q3’17 GDP growth clocking in at 1.4% y/y and the successful $3 billion Eurobond issue. However, sentiment was dulled by news of Moody’s Ratings downgrade of Nigeria’s sovereign debt as well as the downgrade of notable Nigerian stocks in the MSCI Frontier Markets Index. In line with recent year-end trend (2-year average December return: 5%), we foresee mildly positive activity in December. We highlight the outcome of the today’s OPEC discussion on an extension of the oil output cut as a relevant signpost for market activity for the rest of the year.                                                                

Positive sentiment dominates Nigerian Bourse                                                               

Healthy buying interest pulled the Nigerian equity market 55bps higher yesterday, with all key sectors save for the Industrial Goods sector closing in the green. We note the positive intraday market sentiment and consecutively widely positive market breadth. Given the number of stocks which closed on the bid cart, we expect bulls to retain dominance on the NSE today.                                                           

Stock Watch: UNILEVER has gained 13% in the last eight sessions. The stock currently trades at a year high of N41.89, above Vetiva target price of ₦26.10, and has returned 20% Ytd.                                                

Buy interest surfaces in T-bills market amid PMA                                                           

The CBN conducted a T-bills Primary Market Auction (PMA) yesterday, offering and selling ₦117 billion across the 91DTM, 182DTM and 364DTM bills at respective stop rates of 12.95%, 15.00% and 15.57% (effective yields: 13.38%, 16.21% and 18.43%). Amid the bi-monthly T-bills PMA, buying interest resurfaced in the secondary market with yields across maturities in the space declining 9bps on average. Meanwhile, bearish trading sentiment strengthened in the bond market with sell pressure evident across select benchmark tenors. Given the lower yields at Wednesday’s PMA vs secondary market levels, we expect buying interest to strengthen across the T-bills space. Also, the expected improvement in system liquidity – from the ₦xx billion OMO inflow – should support healthy demand across maturities in the fixed income market.