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The Market Today - 14th March 2017

​Parliament gives UK Prime Minister Brexit green light

The UK parliament passed legislation that permits Prime Minister Theresa May to trigger Article 50 of the Lisbon Treaty, paving the way for May to do so by the end of March. Triggering Article 50 would begin two years of exit negotiations between the UK and European Union. Whilst the UK economy has remained resilient after the outcome of the Brexit vote in June last year (FY’16 GDP growth: 2%, IMF forecast: 1.8%), the commencement of exit negotiations is likely to generate another period of economic uncertainty for the UK and the global economy. We highlight that Nigeria is partly reliant on the UK for foreign exchange earnings as the UK was the largest contributor of both remittances and foreign investment in 2015 and 2016.

Bears prevail at week open, ASI down 40bps

Coming off the positive run at the close of last week, the Nigerian bourse saw a reversal at week open as the NSE ASI closed 40bps lower dragged by selloffs in select market heavyweights. We believe the market would trade mixed in today’s session given the varied sentiment across key sectors.

Stock Watch: Since touching a near 5-year of N570.00 on March 2, NESTLE has rallied 29% to current price of N734.99. Notwithstanding, the stock still trades at a FY’17 P/E of 24.3x vs its 5-year median of 36.1x.

Investors to take cue from February Inflation

The T-bills market traded bullish with yields inching 7bps lower on average. However, the bond market traded mixed, although yields on select maturities remained sticky. With February Inflation expected to come in lower than recent trend (Consensus estimate: 17.2% vs 18.7% in January), we foresee improved buying interest, particularly in the T-bills space.