Breakfast Report - 05 March, 2018
The Week Ahead
According to the National Bureau of Statistics, Q4’17 imports and exports came in at ₦2.1 trillion and ₦3.9 trillion respectively, bringing current account balance to ₦1.8 trillion in the quarter, up 65% q/q and 168% y/y. This brought FY’17 net export to ₦4.0 trillion (surplus), compared to a net import of ₦290 billion (deficit) in FY’16. The jump in the current account balance in Q4’17 was mainly due to a 10% q/q and 34% y/y increase in crude oil exports to ₦3.3 trillion, thus sustaining its position as the larger contributor (83% of total exports) to the account. Meanwhile, imports in the quarter declined 15% q/q and 8% y/y to ₦2.5 trillion following a dip in petroleum product imports. We note that the positive Q4 and FY balance is an indication of the recovery in Nigeria’s crude exports, as the country’s underlying trade profile remains little changed despite diversification efforts.
The Nigerian equity market rounded off last week on a mildly positive note, gaining 8bps on the day. Despite mixed closes through the week, the index ended the week with a positive return (+72bps w/w), thereby pulling ytd returns to 12%. This week, whilst we believe market sentiment will remain mixed, we expect more earnings releases to modestly dictate trading direction.
Stock Watch: Amidst news that U.S. based private equity firm Milost Global Inc. is considering investing in UNITYBNK, buying interest has strengthened on the stock in recent sessions. UNITYBNK was the second highest gainer for the week (+19%) and currently trades at ₦1.77. The stock has returned 234% so far this year.
With the CBN likely to continue mopping up excess liquidity, we expect the T-bills market to sustain a mixed trading pattern this week whilst the bond market is expected to remain quiet.
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