NIGERIAN MARKET DEVELOPMENT: MTN Listing And Other Stories

…MTN gains 20 % in 2-day trading after historical listing 
MTN Nigeria finally listed on the Nigerian Stock Exchange (NSE) Premium board on Thursday and became the second largest company on the main board of the local bourse.Before the listing of the MTN shares on the bourse, Dangote Cement majorly owned by Africa’s richest man Aliko Dangote controls a third of the market capitalization, while Nestle Plc occupied the second position.

The shares of the telecoms rallied on Friday by 10 percent, to close at 108.9 naira per share, the second of such gain after the company's shares were listed on the NSE.
MTN Nigerian listed a total of 20.4 billion shares quoted at 90 naira per share by introduction on the Premium Board of the NSE, with the aim of raising further capital on a later date through the Initial Public Offer (IPO).
The South African parent company currently controls about 78.8 percent of the stake in the Nigerian unit and hope to dilute further its holdings in the future.
The listing of the telecoms firm on the local bourse has been seen as an impetus to other telecoms firms and foreign companies to consider listing on the NSE.
The development will also boost the capitalisation of the market and help projects it further as a leading stock market on the continent.
With the expectations of possible listing by other telecoms firms, Nigeria stock market will soon overtake other major emerging markets in term of size.
If eventually, the telecoms giants make good its proposal to issue an IPO, this will further deepen the local capital market and encourage more offshore participation in the local market.
…Rising demand for local debt on Emefiele reappointment
Demand on fixed income increases in the week to Thursday as investors are responding to the reappointment of Godwin Emefiele as the CBN governor for a second term tenure of five years.
The Senate, which has the mandatory affirmation authority eventually confirmed the reappointment of Emefiele on Thursday.
Market dealers said the increasing appetite for fixed income assets by investors was a reflection of confidence in the extension of the tenure of the regulatory bank chief.
Yields on long tenor debt note are trending lower as pension fund managers, insurance and offshore investors lapped up available bonds in the secondary market.
Expectations of traders were that going by the trend in the market, the debt auction coming up next week will be oversubscribed by investors.
Nigeria plans to sell 100 billion naira in 5-, 7- and 30-year paper at an auction next week Wednesday.
The auction will be coming a day after the meeting of the Monetary Policy Committee (MPC), which holds on Tuesday 21, to determine interest rate direction.
Traders are also anticipating an increase in yields at the bond auction next week in view of the rise in consumer inflation in the month of April.
Inflation figure released by the Nigerian Bureau of Statistic (NBS) on Wednesday rose to 11.37 percent in April from 11.25 percent in the previous month as food inflation rises.
… Consumer inflation spike may hamstrung MPC next meetingAs the 11-member Monetary Policy Committee (MPC) meets next week, there is an indication that the rate-setting body would retain the benchmark interest rate at 13.5 percent.
Before the NBS released the inflation figure for the month of April, expectations were that the MPC may likely continue to ease its hold on liquidity tightening tool.
However, with the inflation rising to 11.37 percent in April from 11.25 percent in March, the policymakers would definitely be hamstrung to tinker with the monetary control instrument.
Insiders said the spike in inflation rate was the market response to what was described as the premature slash in the MPR by the CBN at its March MPC meeting.
The MPC had in March slashed the benchmark rate to 13.5 percent from 14 percent to ease system liquidity and encourage banks to lend to the productive sector of the economy.
But a report by the bank has since shown that many banks are not showing interest in lending to the critical sector of the economy, rather they prefer investing their surplus funds in government debt instruments.
An increase in yields on the fixed income could boost inflow of foreign exchange into the country as offshore investors find attractive returns on their investment.
Presently, rates in both the Eurozone and the U.S. are quite low and any increase in yields on the domestic debt could be an attraction for more offshore investors to come into the market.
Economists are predicting a further rise in the inflation figure in the coming month, to be driven by both demand-pull and cost-push inflation factors.
According to Bismark Rewane, an economist, The commencement of planting season will result in food supply shortages while the minimum wage implementation and the Ramadan fast would increase consumer demand. All things being equal, the confluence of supply shortages and increased demand would exert pressure on prices.