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Weekly Market Wrap - 4 August 2017

Consumer Goods lift ASI 152bps w/w                                       

As earnings flow moderates, the NSE ASI gained 78bps at week close, stretching gains to the fourth consecutive day after a weak start to the week. Overall, the market closed the week 152bps higher, lifting ytd gains to 39%. With trading pattern particularly positive at the tail-end of the week amidst healthy demand on several blue chips, we expect bullish sentiment to filter into the start of next week. However, we do not rule out the possibility of profit taking on stocks that have rallied significantly in recent sessions.                                      

Stock Watch: Despite posting better than expected H1’17 results last Friday (PAT up 56% y/y), CCNN lost 10% at week open. Since then, the stock has rallied 18% to trade at ₦9.84 (Consensus TP: ₦6.99), returning 97% ytd.                               

Quiet trading week as FMDQ suspension dampens activity                                      

Amidst a growing number of unsettled trades in the fixed income market, FMDQ called for a suspension of the two-way quote trading system from Monday – Wednesday in order to clear the settlement backlog and ensure smooth market trading. Given this, sentiment in the fixed income market was largely tepid for the first three trading sessions of the week, with little activity occurring across the space.                                      

We expect demand in the T-bills market to remain capped by the liquidity squeeze even as the CBN continues regular mop ups. In line with trend in recent weeks, we expect activity in the bond space to remain muted as interest remains low in the space. We expect the new FMDQ directive to further buoy investor confidence, transparency and deepen liquidity in the foreign exchange market.