The Market Today - 3 May, 2017
Nigeria to review FX restriction on 41 import items
The Vice President of Nigeria, Yemi Osinbajo stated yesterday that the Federal Government may lift the restriction to access foreign currency at the official FX window for the importation of a list of 41 items. We recall that the restriction was introduced in 2015 after a steady decline in global oil prices dealt a blow to oil revenues – Nigeria’s biggest source of foreign exchange. Given the call for a market driven FX policy by foreign investors, we expect this to be perceived as a step towards a more liberal FX regime, particularly with the introduction of the NAFEX window for investors and exporters. We highlight that a review of the ineligible items should help divert dollar demand away from the parallel market and help close the gap between the parallel and official markets.
Equities rally further on upbeat earnings
The NSE ASI (up 80bps) surged further at week open as investors continued to cheer a flurry of better-than-expected Q1’17 earnings. We believe continued positive market reaction to earnings will drive further advances on the bourse today. However, given the magnitude of gains recorded in previous sessions, we expect profit taking activities to surface in the coming sessions.
Stock Watch: Amidst market reaction to its Q1’17 earnings announcement (PAT up 7% y/y), NPF Microfinance Bank (NPFMCRFBK) has gained 26% in four consecutive sessions. The stock currently trades at a five-year high of ₦1.44.
Dangote Sugar PLC announced plans to raise ₦21.2 billion via a Rights Issue before the end of its 2017 financial year in order to finance its backward integration plans.
Yields trend south at week open
The fixed income market traded largely bullish at week open, supported by the liquidity boost from last week. We foresee sustained demand for fixed income instruments in today’s session, supported by buoyant system liquidity despite the mop ups. Also, the CBN would be offering ₦105 billion across the 91DTM, 182DTM and 364DTM bills in a Primary Market Auction today.
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