13 June 2018 ( Lagos) : The National Bureau of Statistics (NBS) would release inflation statistics for May later today. Analysts expect the inflation figure to have moderated from 12.5% y/y in April to 11.3% y/y in May (Consensus: 11.4% y/y) amid flat m/m inflation of 0.8% (same as in previous four months in 2018). Given the flat trend in m/m inflation, the expected drop in inflation would be driven by the high base from 2017 inflation (May 2017: 16.3% y/y, 1.9% m/m). 

Analysts expect this moderation to persist in the next few months (helped by base effects) though they anticipate more pressure from food prices amid the ongoing herdsmen conflict, and further out – greater demand-pull inflation from expansionary fiscal policy. 

Financial Market Update

Yields in F.I market head southwards 

The Interbank Call rate advanced 334bps to 15.17% (previous: 11.83%) despite the CBN refraining from conducting an OMO auction yesterday.

Sentiment in the T-bills space was mixed with a positive bias as yields declined 4bps on average. While yields on the 93DTM (-125bps to 11.21%) and 177DTM (-34bps to 12.92%) bills declined, we noticed a sharp uptick in yield on the 296DTM bill, up 47bps to 14.43%. Likewise, trading in the bond space was bullish as yields on benchmark bonds declined 8bps on average. Specifically, buying was evenly spread across maturities in the space with yields on the 16.39% FGN JAN 2022 and 12.50% FGN JAN 2026 bonds moderating 19bps and 13bps to settle at 13.31% and 13.52% respectively.

Analysts expect investors to tread cautiously ahead of the T-bills Primary Market Auction today at which the CBN will be offering N175 billion on the 364DTM bill, and thus expect a quiet session with a negative bias.

Oil & Gas sector supports another green close for ASI 

The Nigerian Stock Exchange continued the week in the green with all but one key sector closing in the green, ASI up 83bps. 

The Oil & Gas (+489bps) sector was the best performer on the exchange buoyed by strong showings in ( SEPLAT ) (+814bps) and ( MOBIL ) (+499bps). Likewise, the Industrial Goods (+49bps) and Consumer Goods (+38bps) sectors closed in the green on the back of gains in ( DANGCEM ) (+136bps) and ( NESTLE ) (+309bps) despite losses in ( WAPCO ) (-13bps) and ( NB ) (-76bps). Meanwhile, the Banking sector shed 4bps on the day after declines in ( ACCESS ) (-184bps), ( ZENITHBANK ) (-37bps) and ( GUARANTY ) (-24bps) overshadowed advances in ( UBN ) (+427bps) and ( UBA ) (+137bps). 

Market breadth remained positive with 26 advances and 23 declines. 

Market Outlook 

Analysts expect the bourse to sustain a marginally bullish trading pattern at mid-week as investors continue to cherry pick across sectors. 

Stock Watch

( DANGFLOUR ) has added 20% over the last six sessions. The stock currently trades at a price of N10.70 and has declined 12% YTD, compared to the 5% YTD loss of the Consumer Goods sector. 

Corporate Disclosures 

The Board of Directors of International Breweries Plc. at its meeting on June 11th 2018 has appointed His Royal Majesty, Igwe Nnaemeka Alfred Achebe CFR, MNI as the new Chairman of the Companies Board of Directors. 

Ecobank Transnational Incorporated, the Lome, Togo-based parent company of the Ecobank Group, announced the departure of Ms. Dolika Banda from its Board of Directors as a Non-Executive Director.