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The Market Today - 13 April 2017

CBN to begin FX sale for dividend repatriation

In a statement on Tuesday, the CBN announced that it would be opening a special window for sale of foreign currency to foreign investors for the purpose of repatriation of dividends. We recall that the IMF and JP Morgan commented that the continued backlog of FX requests for dividend repatriation acts as a barrier to obtaining further investment from the international community – investors get jittery about the possibility of not obtaining FX to recoup profits from investments. While this might not be the answer to all of Nigeria’s FX challenges, we note the continuous effort of the apex bank to improve FX liquidity and accessibility in recent weeks and we expect this to continue to improve investor confidence in the market.

NSE ASI closes flat in mixed trading session

At mid-week, the NSE ASI (+7bps) balked its losing trend to close marginally higher, supported by positive turnarounds across a handful of stocks. We highlight the mixed sentiment as evidenced by the almost even market breadth and mixed closes across key sectors. Whilst we expect the varied sentiment to persist today, we foresee a slightly positive trading bias given the turnaround observed across a number of previously pressured stocks.

Stock Watch: Amidst news of a potential capital raising in yesterday’s session, UNILEVER sank 500bps to ₦33.25. We foresee possible pressure on the stock today.

Bonds trade bearish following Primary Market Auction

Amidst the bond auction, the bond market traded bearish as yields advanced 21bps across benchmark maturities. Trading in the T-bills market was however mixed albeit with a bearish bias as the tight system liquidity continued to cap demand. We expect cautious trading ahead of today’s expected currency sale by the CBN. We also expect to see muted trading across the fixed income market as system liquidity remains pressured.