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Breakfast Report - 06 March 2017

• Amidst its ongoing interventions to boost liquidity in the foreign exchange (FX) market, the CBN has outlined a number of directives to commercial banks regarding FX transactions. The directives are as follows; open a teller point for retail FX transactions; provide for an electronic display board to show trading exchange rates; meet the demand for PTA/BTA within 24 hours; meet the demand for school fees and medical fees within 48 hours. We anticipate the easier access to FX could ease pressure on the naira in the parallel market over the week.
• The DMO in a circular issued on Thursday raised the minimum subscription size in Treasury Bills primary auction to ₦50,001,000 (Previous: ₦10,000). We believe that this decision must have been taken in a bid to redirect retail investors’ interest to the newly introduced FGN Savings Bonds. The bonds will be issued by the DMO through an auction process with minimum subscription size of ₦5,000 (Max: ₦50 million) and is expected to be listed on the Nigerian Stock Exchange (NSE) for secondary market trading. The Savings Bonds will be issued monthly in tenors of 2 to 3 years with quarterly coupon payment.
• Amidst a flurry of corporate announcements, the Nigerian bourse traded mixed with a bearish bias this past week with the NSE ASI shedding 94bps for the week, putting ytd losses at 6.9%. Having opened the week higher on buying interest across a number of bellwether stocks, the market tarried in the red for three consecutive sessions as key sectors took turns to pressure the NSE ASI. However, the NSE ASI rebounded at week close, boosted by renewed appetite across select blue chip stocks.
• With the sixty-day period for firms to publish their earnings already due, we anticipate a flurry of releases in the coming week. As such, we expect trading activities to be largely influenced by investor reaction to the results.
• Stock Watch: OKOMUOIL rallied in the previous week, notched 10% to close at ₦48.7. We attribute this to investors taking position ahead of earnings announcement. We expect OKOMUOIL to report a big jump in FY’16 EPS to ₦5.29 (FY’15: ₦2.79), supported by the consistent rise in palm oil prices (particularly in Q4’16). A board of directors meeting to consider the draft audited accounts and payment of dividend for FY’16 has been scheduled for 16 March, 2017.