FREE

The Market Today - 1 June, 2017

ASI records best month in over two years
With several economic indices indicating a positive outlook for the Nigerian economy – Q1’17 GDP contraction slowed to -0.5% (Q4’16: -1.7%, Q1’16: -0.7%) and April Manufacturing PMI came in above 50 for the first time since December’16, the Nigerian bourse gained 15% in May, the highest m/m gain in over two years. This positive sentiment reverberated across counters with all key sectors save for the Oil & Gas sector closing the month in the green. The Banking sector (+26% m/m) was the overall best performer, driven by sizeable gains in its key sector leaders – GUARANTY hit a record high and currently trades at a premium to our target price. Also, FBNH rose 67% in the month after an eleven-session run towards month-close. Worthy of note also was the increased activity on the exchange amidst a spike in Value traded – average daily turnover in May at ₦4.9 billion vs ₦1.9 billion for the previous for months. With economic outlook still positive for Nigeria and increased confidence and liquidity in the foreign exchange market, we expect positive sentiment to further persist on the Nigerian stock exchange for the month of June.

DANGCEM propels ASI to positive close at midweek
Despite choppy trading at the start of the session, the Nigerian equity market (NSE ASI: up 76bps) rallied towards market close, propped up by sizeable gain in DANGCEM. Whilst buying sentiment remains high – market breadth remains positive, we believe the emergence of profit taking, especially in the banking sector, could leave trading on the exchange mixed today.

Stock Watch: After adding 10% over a four-session gaining streak in which GUARANTY hit a record-high, the Banking sector dipped 306bps today. The strong gains recorded by sector members over the period of the rally could leave room for further profit taking on select banking names.

Market persists bullish ahead of PMA
Amidst the PMA, healthy system liquidity continues to support secondary market trading with yields moderating across the T-bills market. The bond market however turned mixed on the day with yields moving in opposite directions. Whilst we expect trading sentiment to be guided by the result of the PMA, we expect the modest system liquidity to continue to support buying sentiment in the T-bills market.