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Breakfast Report - 3rd April, 2017

The Nigerian Stock Exchange is seeking Senate approval to list on the exchange. The listing is expected to happen before 2020 and advisors have been appointed. According to the CEO of the NSE – Oscar Onyema, legislation to transform the bourse into a company limited by shares will be introduced as a first step and will be followed by a complete demutualization process, enabling the addition of new shareholders. Also, the move is expected to improve transparency, product development and deepen the market - leading to increased offshore inflows. The listing would be on the Nigerian bourse with the option for a secondary listing abroad.   

Despite closing lower on Friday (the last trading session of Q1), the Nigerian Bourse gained 24bps w/w thanks to gains recorded earlier in the week; the NSE ASI returned -5.05% for Q1. In the same vein, the Consumer Goods sector shrugged off final day losses to close the week 21bps higher w/w. The Banking sector (down 100bps w/w) however extended losses at week close driven by last losses in large-cap, GUARANTY. The Industrial Goods (+216bps w/w) and Oil & Gas (+395bps w/w) sectors also closed higher after sustaining gains in the last day of the quarter.

Although the market closed lower on Friday, we highlight that it was largely spearheaded by declines in the two large caps – NB and GUARANTY. Nonetheless, investor appetite was relatively upbeat even as market breadth remained positive (24 advances vs 18 declines). As such, we believe the ASI would rebound in today’s session.    

Stock Watch: UACN released its FY’16 results with PAT up 10% y/y and 84% ahead of Bloomberg consensus. The Board of Directors also proposed a final dividend of ₦1.00 versus consensus of ₦0.60. UACN currently trades at ₦13.00 and has lost 23% ytd.

For the Fixed Income market, we expect activity in the T-bills space to remain pressured, especially at the short end of the space. Meanwhile, with the Q2’17 bond calendar expected this week, we foresee cautious trading in the bond market as investors await clarity on this quarter’s supply.