The Market Today - 23 August 2017
Foreign Investments surge in second quarter
According to the data from the National Bureau of Statistics (NBS), Nigeria recorded capital imports of $1,792 million in Q2’17, a significant increase from $908 million and $1,042 million recorded in Q1’17 and Q2’16 respectively. We believe the figures do not account for $1.8 billion raised in Eurobonds and Diaspora bonds so far in 2017. Rather, the surge in foreign inflows was driven by strong growth in Foreign Portfolio Inflows (FPI) into equity instruments – rising from $102 million in Q1’17 to $614 million in Q2’17, as well as inflows in the form of loan investments – doubling from $369 million in Q1’17 to $747 million in Q2’17. We attribute the recovery in capital imports to the relative success of the “Investors & Exporter’s” Foreign Exchange window which improved liquidity in the market and assuaged investor concerns over the return of capital. Therefore, we consider the persistence of this recovery in capital imports to be tied to the sustainability of current foreign exchange market dynamics.
DANGCEM gain pushes market into the green
On a day of largely mixed trading, the Nigerian bourse closed 103bps higher, lifted by advances in market heavyweight DANGCEM. Amidst still-varied intraday trading – save for the spike in heavyweight DANGCEM – we expect mixed sentiment to persist in today’s session.
Stock Watch: After dropping 19% over six sessions, LIVESTOCK went on to rally 17% over the last five sessions. The stock currently trades at ₦0.95 and has returned 13.10% Ytd. There has been a lot of activity around the stock, with an off-market trade of 100 million units at ₦1.00/share yesterday coming a few weeks after a 133 million unit trade at the same price.
Bond spaces remains quiet as liquidty squeeze persists
The CBN conducted another OMO auction yesterday, offering ₦60.00 billion and selling ₦61 billion across the 184DTM and 352DTM bills at respective stop rates of 17.95% and 18.5490% (effective yields: 19.74% and 22.59%). Ahead of today’s ₦135 billion bond auction today, activity in the bond market remained tepid with yields on most maturities closing flat across the space. Meanwhile, the T-bills market turned slightly bullish with yields inching lower on select maturities. Amidst the pressured system liquidity, we forsee mixed trading in the T-bills market. We expect trading in the bond space to remain relatively quiet and cautious pending the release of the auction results.
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