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The Market Today - 25 April 2018

Consumer Confidence Index shows mixed bag                                                

According to the Consumer Expectations Survey carried out by the Central Bank of Nigeria (CBN), consumer confidence in the country declined from 1.0 in Q4’17 to -6.4 in Q1’18, indicating reduced optimism about economic conditions. However, consumers had a positive outlook for the next quarter (20.8) and the following twelve months (28.5). Despite the relatively positive outlook for the economy, consumers intimated their unwillingness to spend on big ticket items this year amid fears of high inflation in the country. On a more positive note, respondents believed the naira would appreciate during the year. We maintain our relatively positive expectations for the year and expect moderating inflation to provide further support for consumer wallets during the year.                                                                  

Mixed sentiment persists despite positive close                                                            

With only one key sector closing in the red, the Nigerian bourse posted a mild recovery as the ASI climbed 10bps. Despite the positive close, underlying mixed sentiment persisted amidst market reaction to some earnings releases. Varied sentiment is expected to persist at mid-week as market participants continue to cherry pick across the market.

Stock Watch: DANGCEM released its Q1’18 results yesterday after announcing changes to its Board of Directors, reporting a top line of ₦242 billion (+16% y/y), 7% above our forecast and bottom line of ₦72 billion (+36% y/y), 30% above our forecast of ₦55 billion. The stock currently trades at a price of ₦248.00 and has returned 8% ytd.                                                        

Yields moderate at a slower pace in T-bills space                                                            

In the absence of an OMO auction by the CBN to mop-up liquidity, the Interbank Call rate declined from 2.83% to 2.58%. Sentiment turned mixed in yesterday’s trading session, with yields moderating at a much slower pace than previous sessions (down 4bps on average). On the other hand, sentiment in the bond space turned slightly negative following several sessions of strong buying, as yields on benchmark bonds advanced 7bps. While we expect market sentiment in the T-bills space to remain bullish with activity tilted towards buying, we expect less aggressive yield declines across the market – barring any other significant cut in stop rates at the primary auctions. That said, we expect investors in the bond space to tread cautiously ahead of the Bond PMA today at which the DMO will be offering ₦90 billion evenly distributed across the 5-year, 7-year and 10-year bonds.