Breakfast Report - 29 January, 2018
The Week Ahead
The amendment to the NSE’s pricing methodology kicks off today. Effectively, the price floor for stocks listed on the NSE now stands at ₦0.01 from a previous floor of ₦0.50 per share. Also, the stock minimum tick size would no longer be ₦0.01 per share across all stocks. Rather, it would be determined by the price of the stock - ₦0.10 for stocks above ₦100.00, ₦0.05 for stocks between ₦5.00 and ₦100.00, ₦0.01 retained for stocks between ₦0.01 and ₦5.00. The amendment to minimum trade volume to move the price of a stock will also commence today – 100,000 units (Previous: 50,000 units) for stocks below ₦0.01, 50,000 units (unchanged) for stocks between ₦5.00 and ₦100.00, 10,000 units (also unchanged) for stocks above ₦100.00. We see the new policies supportive of more efficient price discovery and liquidity improvement on the exchange. Meanwhile, we expect to see increased activities particularly across the Insurance stocks given that most of them have been sticky at the ₦0.50 floor for a long period.
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.
Whilst we expect last week’s FAAC inflow to support demand on fixed income instruments at the start of the week, we expect the persistent liquidity mop up from the CBN to cap the pace of yield declines.
Vetiva provides clients with independent and unbiased access to analysis and opinion. We keep our clients on the cutting edge of market information and provide up to date market intelligence on quoted companies. Our services allow brokers, investment firms, and asset managers focus their energies on developing investment strategies and client relationships.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.