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Breakfast Report - 23 April, 2018

The Week Ahead                                                                            

It has been a year since the introduction of the “Investors & Exporters’” (I&E) foreign exchange (FX) window to address the illiquidity and transparency of Nigeria’s FX market. The I&E window has been a success - encouraging the return of foreign capital and attracting over $10 billion autonomous inflows to the market. The exchange rate appears to have stabilized in floating segments of the market whilst international organizations such as the International Monetary Fund and Fitch Ratings Agency have commended the efficacy of the market. As relatively high oil prices support Nigeria’s FX earnings, we anticipate continued stability on the FX front and believe the I&E window would continue to provide a platform for sufficient FX liquidity.                                                                      

Equity: The Nigerian equity market rounded off last week on a negative note, shedding 14bps on Friday to extend the week’s loss to 28bps. Market sentiment appears lukewarm given the mixed closes across key sectors and sustained negative market breadth, even as the ASI traded lower for most part of Friday’s session. We expect this to drive the market to a weak start this week.           

Stock Watch: UNILEVER released its Q1’18 results yesterday reporting revenue of ₦26 billion (+16% y/y) and PAT of ₦3 billion (+81% y/y) - coming in 4% and 23% ahead of our estimates respectively. The stock shed 364bps on Friday to close at ₦53.00, higher than our target of ₦34.15. UNILEVER has gained 29% year-to-date.                                                                          

Fixed Income: With significantly buoyant system liquidity and the CBN’s less aggressive stance on conducting OMOs, we foresee a positive trading session today.