The Market Today - 4 May, 2017
​National Assembly set to discuss 2017 appropriation bill
The National Assembly is set to discuss the details of the 2017 Appropriation Bill in the coming weeks. Reports from the Senate suggest that consideration of the bill is likely to begin next Tuesday and may take a minimum of two weeks. We recall that the 2016 fiscal year, which was extended due to a delay in passing the 2016 budget, ends this May. However, the expiration of the fiscal year will not lead to a government shutdown as the Federal Government is legally permitted to dip into the Consolidated Revenue Fund (CRF) pending the approval of the 2017 budget. We note that we have seen improvements on several fronts – access to foreign exchange, rebounding oil volumes, and a turnaround in Manufacturing Purchasing Managers’ Index. However, passing the 2017 bill remains essential to improving capital expenditure, which is necessary to stimulate the economy in a more sustainable manner. This would accelerate economic recovery and also help the country achieve the objectives of the Economic Recovery and Growth Plan (ERGP) which targets growth of 2.2% for 2017 (Vetiva: 1.9%).
NSE ASI sails past 26,000 points, up 58bps
The Nigerian equity market stretched its gaining streak to four sessions, with the NSE ASI (up 58bps) sailing past 26,000 points for the first time since February. We foresee further gains for the NSE ASI today, supported by the strong positive market sentiment. Meanwhile, gains could be capped as investors begin to take profit.
Stock Watch: Riding on positive market reaction to Q1’17 results (PAT up 32% y/y), UBA has notched 20% in seven straight sessions of gains. The stock currently trades at an 18-month high of ₦6.28 and has returned 40% ytd.
Bills continue bullish trend amidst PMA
Amidst the PMA, the bills market traded bullish. In contrast, the bond market was broadly bearish with yields rising across the space. We foresee further selloffs in the bond market, given the recent bearish sentiment in the space. For the bills space, we expect trading direction to be determined by results of the PMA.
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