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The Market Today - 30 June 2017

NSE foreign participation clocks in at ₦95 billion

According to the Nigerian Stock Exchange, total transactions on the exchange in the month of May surged to ₦206 billion from ₦55 billion in April. Notably, foreign investor transactions rose from ₦22 billion to ₦95 billion, the second highest figure this year, behind March (₦133 billion). Meanwhile, unlike March where the participation was mainly in the form of outflows (₦109 billion vs Inflows: ₦24 billion), foreign participation in May was in favor of inflows (₦73 billion vs outflows: ₦22 billion). We highlight the continued economic recovery over the period and more importantly, the improved FX liquidity amidst periodic intervention by the CBN and the introduction of the Investors and Exporters (I&E) FX window as key drivers of the improvement of foreign transactions. Daily transaction numbers on the exchange for the month of June have equally been strong and suggest that foreign participation has remained relatively upbeat over the course of the month; still most likely buoyed by improved FX liquidity. Meanwhile, we highlight that crude oil prices have been under pressure in recent times, currently $47.72/bbl (Ytd average: $52.75) and pose a threat to sustained improvement in FX market liquidity and consequently, foreign participation.

ASI up 188bps as Nigerian equity market remains bullish

Sustaining the rebound, sentiment on the Nigerian equity market remained positive yesterday as the NSE ASI rose 188bps following solid gains across all key sectors. Although the broad sector gains and the firmly positive market breadth signal further gains today, we however highlight possibility of profit taking as investors may want to lock in gains at week/quarter close.

Stock Watch: After gaining 270% over a fifteen-session bull run, MAYBAKER has lost 22% over five consecutive sessions amidst profit taking. The stock currently trades at ₦4.29 with ytd returns of 356%.

OMO inflow sustains demand in T-bills space

Buoyed by improved market liquidity, the bills market sustained bullish trading with yields moderating 22bps on average. Trading in the bond market was mixed amidst a relatively quiet session, with yields moving in opposite directions. We expect the robust system liquidity to further drive demand for bills today. Meanwhile, we highlight that the CBN will most likely revisit the market today with another OMO announcement given the no-sale recorded yesterday. As for the bond market, we expect the relatively quiet trading pattern to persist.