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The Market Today - 20 April 2017

​World Bank raises Nigeria’s growth forecast
Just like the International Monetary Fund, the World Bank has also cut its GDP growth forecast for sub-Saharan Africa to 2.6% and 3.2% for 2017 and 2018, down from its earlier forecast of 2.9% and 3.6% respectively. The revision was predicated on weak growth in some of the region’s largest economies, following lower for longer commodity prices, tight foreign exchange liquidity and weak investor confidence. However, the Bank raised its growth forecast for Nigeria to 1.2% from an initial estimate of 1.0%, although still lower than Vetiva estimate.  We recall that we had earlier projected a 1.9% growth for 2017 on the back of an improvement in oil production and low base effect. Also, we believe the recent improvement in FX liquidity should help shore up economic activities.
 
Market blue chips steer ASI into the green
Paring losses recorded at week open, the NSE ASI turned positive at mid-week (up 49bps). This was mostly supported by robust gains across bellwether stocks in the Consumer Goods and Banking sectors. Notwithstanding the positive close, we highlight that trading was largely mixed as indicated by the market breadth (15 gains vs. 13 declines). That said, we expect this trading pattern to continue as bargain hunting persists and investors position ahead of Q1’17 earnings which have started to trickle in.

Stock Watch: ETI has shed 600bps in the last four consecutive sessions amidst investor reaction to its FY’16 earnings announcement (FY’16 LAT: ₦52 billion vs. FY’15 PAT: ₦21 billion). The stock currently trades at an over five-year low of ₦7.76 and could be pressured further in the days ahead.  

Bearish trading persists amidst PMA
Amidst the strained system liquidity, trading in the fixed income market was muted with a slight bearish tilt. We foresee further muted trading with a bearish bias as system liquidity remains pressured.