The Market Today - 11 April, 2017
​CBN to sell FX to SMEs for eligible imports
The CBN announced a special foreign exchange window for Small and Medium Scale Enterprises in a bid to resuscitate businesses that have been stifled out of the foreign exchange space due to low FX supply. The CBN will be offering up to $20,000 per quarter to firms with staff size and asset base of between 10 and 199 and ₦5 million to ₦500 million respectively to enable them import eligible finished and semi-finished items. Also, the apex bank will be offering forwards of 7 to 30-day maturity as against the present 60-day forward contracts. We highlight that the naira has rallied in the parallel market over the period of interventions by the CBN, however the currency has pulled back in recent weeks. Nonetheless, we expect sustained intervention by the CBN to further improve FX liquidity, thus easing the pressure on the naira in the near term.
Equities open bearish amidst profit taking
The Nigerian equity market opened the week to sell offs as the NSE ASI (-47bps) pared previous week’s gains following quick profit taking on select stocks. We foresee another bearish trading session today given the pressure on select large caps and as investor continue to lock in profit from recent gains.
Stock Watch: Despite uninspiring FY’16 results (PAT down 30% y/y and 18% behind Consensus estimate), FIDELITYBK rallied 952bps at week open as investors focused on an impressive dividend announcement of ₦0.13/share (Consensus estimate ₦0.10/share) – 15% dividend yield. Closure date is slated for April 18 to April 21.
Bond market continues bullish amidst OMO auction
The bond market closed bullish yesterday with yields declining on select maturities. Meanwhile the T-bills market traded mixed with a bearish bias. Given the sustained buying interest in the bond space, we expect to see further bullish trading at the long end of the curve as market participants continue to position for ₦480 billion bond maturity later in the month. However, we highlight that constrained system liquidity could cap buying interest in the bills market.
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