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The Market Today - 16 May, 2017

April Inflation figures set to roll out today
The National Bureau of Statistics (NBS) is expected to release the April Consumer Price Index at 10am today. We expect annual inflation to fall to 16.9% in April (Consensus: 16.9%) from 17.3% in March. Whilst we expect month-on-month inflation to remain high (1.3% vs. 1.7% in March), stronger base effects from April 2016 inflation (100bps higher than March 2016) should weigh on the headline inflation digit. We expect Food prices to remain the key inflation driver, in line with the trend observed since the start of 2017. Meanwhile, we expect imported inflation to moderate further (283bps down between January and March) as improved liquidity in the foreign exchange (FX) market – largely driven by Central Bank of Nigeria FX injections – and relatively stable exchange rate suppress imported inflationary pressures. Similarly, we foresee a mild fall in energy prices in light of the lower landing costs of petroleum products in March, as reported in the Q1’17 petroleum import data. Notwithstanding this downward trend, headline inflation will remain relatively high due to the underlying cost pressures in the economy and the c.55% y/y depreciation of the naira.

Profit taking steers key sectors southward at week open
Extending sell-offs from the close of the past week, the Nigerian Bourse opened the week in red (NSE ASI down 241bps) as investors continue to take profit across board. We believe the market is still in the mood for further profit taking as evidenced by the intraday trading chart and the volume of stocks on offer at the close of trade.

Stock Watch: After gaining 42% over eight sessions, MAYBAKER lost 469bps, closing at ₦1.22 yesterday’s trading session. The stock has returned 30% ytd.

Market cautious ahead of April inflation announcement
The bond market traded mildly bullish amidst a relatively tepid trading session as investors await the April Inflation figure due today. Meanwhile, the bills market sustained mixed trading pattern with yields trending in opposite directions. We expect trading in today’s session to be largely driven by the Inflation figures even as we expect liquidity pressure from currency sales to dampen market activity.