Breakfast Report - 24 April, 2017
​In another move to boost liquidity in the FX market and accommodate all FX obligations, the CBN last Friday announced the establishment of an FX window for “investors and exportersâ€. Transactions eligible to access the window include Loan and interest payments, Dividends/Income Remittances, and Capital Repatriation amongst others. According to the circular, FX supply to the Window shall be largely by portfolio investors, exporters, Authorized Dealers and other parties whilst the CBN will occasionally intervene to provide liquidity. Exchange rate shall be market determined between the Authorized Dealers and their counterparties. Furthermore, the FMDQ will develop and publish a new fixing – the Nigerian Autonomous Foreign Exchange Fixing to support appropriate benchmarking and facilitate derivative activities. In line with the recent drive of the CBN to meet legitimate FX demand in the market, we expect this policy to further improve FX liquidity in the market, however, we highlight that the multiple FX windows and rates could create further arbitraging opportunities for speculators.
The Nigerian equity market traded mixed in a four-day trading week, with investors displaying varied sentiment across counters, in fact market breadth was relatively even for most sessions. However, the NSE ASI closed 126bps lower w/w dragged by weightier losses in bellwether stocks. Year-to-date return now stands at -6.27%.
Having seen a number of Q1’17 earnings last week, we expect to see some investor positioning this week as the first quarter earnings season opens further. Overall, we foresee continued mixed trading on the bourse this week.
Stock Watch: STANBIC rose 497bps at week close, stretching gains in a six-session rally to 12%. The stock now trades at a 52-week high of ₦20.74 and has returned 36% ytd.
For the Fixed Income market, we foresee bullish trading this week supported by the anticipation of a substantial bond maturity of ₦480 billion due later in the week.
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