Breakfast Report - 22 January, 2018
The Week Ahead
The Central Bank of Nigeria (CBN) announced that the two-day Monetary Policy Committee (MPC) meeting initially scheduled to begin today would not hold due to the Bank’s inability to form a quorum as stipulated in the 2007 CBN Act. The Act provides a quorum of six members for an MPC meeting to hold, a target the CBN failed to meet given the Senate’s delay in ratifying the President’s nominations to replace five departed members of the committee. In light of this development, the apex bank stated that all monetary policy levers would be retained at their current levels. We note that this is in line with consensus expectation of what would have happened at the meeting, and should not alter the expected course of monetary easing during the year.
Despite closing 54bps higher on Friday, market sentiment was mixed – evidenced by see-saw intraday trading and negative market breadth. Overall, the NSE ASI surged 511bps w/w. We note the mostly-sideways trading pattern on the exchange at last week's close, indicated by mixed closes across key sectors and negative market breadth. Absent any significant news flow today, we expect the market to kick off the week with varied trading as investors take profit and seek bargain names.
Stock Watch: In line with the wider market, CCNN has been on an uptrend, rising 32% this week. The stock currently trades at ₦17.50, above Vetiva’s target price of ₦8.39 and has returned 84% ytd.
With the CBN showing no signs of letting up on its aggressive mop up stance, we expect mixed trading to persist in the T-bills at week open. Barring any shift in the MPC’s stance on Monetary policy levers, we expect yields in the bond space to remain around current levels, especially as the market anticipates yields at Wednesday’s bond auction (₦110 billion on offer) to remain around these levels.
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