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The Market Today - 13 March 2019

CBN reports Q4’18 balance of payment surplus                                                

The CBN released provisional balance of estimates for Q4’18 yesterday which showed that the Current Account Balance improved from a deficit of $1.5 billion in Q3’18 to a surplus of $1.1 billion in Q4’18. This development was largely attributable to the decrease in imports and transfer payments q/q, while export earnings increased slightly to boost the current account. Meanwhile, Foreign Direct Investments decreased by 28% q/q to $314 million in the final quarter of the year, while portfolio investments inflow to the economy decreased by 23% q/q to $1.4 billion. We recall that the decline in both investment types during the quarter was attributable to investors’ pre-election jitters amid heightened uncertainty brought about by the elections. On a more positive note, external reserves remained stable in the final quarter, with a depletion of only 0.03% q/q. Reserves were supported by the $2.9 billion Eurobond issued in November, with the country having enough reserves to finance imports and defend the currency for approximately 13 months, much higher than the 6-month West African Monetary Zone benchmark. Should imports continue to decrease due to the CBN’s strategic forex restrictions, we foresee further stability in the country’s current account.                                                              

Market continues downturns, ASI down 102bps                                                              

Recording its fifth consecutive negative session, the Nigerian Bourse lost 102bps yesterday as three out of four sectors closed down. Market breadth remained negative with 8 advances versus 29 declines. We expect another negative close in today’s session as bearish run persist in the market.                                    

Stock Watch: DANGFLOUR has lost 12% in last three sessions to close at ₦10.00. The stock is currently trading at a year-to-date return of 46%, outperforming the Consumer Goods sector (-5%).                 

A quiet day in the fixed income market                                                               

Yesterday, the apex bank decided not to mop up liquidity via OMO. Consequently, the Interbank Call rate declined 116bps to 9.67%The CBN is scheduled to conduct its bi-weekly Primary Market Auction today where ₦89.5 billion will be rolled over. In line with lowered stop rates at recently conducted OMO auctions, we expect the PMA stop rates to close lower than last auction (1-year bill closed at 14.37%).