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The Market Today - 24th February 2017

CBN reviews cashless policy
The Bankers’ Committee has reviewed the Cashless policy charges on withdrawals and deposits and also decided to extend the policy to thirty other states, following initial adoption in six states. The new charges will take effect from the 1st of April 2017 in the initial six states and will be subsequently implemented in other states. Key decisions made were the re-introduction of charges on deposits and the review of charges on deposits and withdrawals above ₦0.5 million and ₦3 million for individuals and corporates respectively. The committee highlighted that income generated from the charges would be allocated between the CBN and banks in a 40:60 split. Existing exemptions for revenue generating units of the three tiers of Government, Embassies and Aid donor agencies were retained.

Bellwether stocks drive gains across key sectors
Buoyed by a sustained rally in select consumer goods blue chip stocks and pocket of gains across other key sectors, the Nigerian equity market closed firmly in the green with the NSE ASI up 63bps. We believe the NSE ASI will hold on to gains at week close supported by the sustained appeal for select Consumer Goods names.

Stock Watch: AFRIPRUD announced a 30% y/y decline in PAT for FY’16 at the close of Thursday’s session. The stock also stretched its losing streak to three consecutive sessions and currently trades at ₦3.05. We foresee further losses at week close as investors react to the results.

Yields advance following another CBN SMIS
For the second time this week, the CBN intervened in the FX market, offering a sum of $230 million through SMIS. Following the sale, Interbank call rate raced to 112% (previous: 31%) as system liquidity came under significant pressure despite recent inflows from FAAC and OMO maturity. Consequently, the fixed income market traded bearish with yields trending northwards. We expect a slightly bearish trading pattern at week close given the taut system liquidity.