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The Market Today - 31st March 2017

CBN to begin twice-weekly sale of FX to BDCs

The Central Bank of Nigeria (CBN) has announced that it will resume the sale of FX to licensed Bureau de Change (BDC) operators, starting April 3. The sale would be conducted twice a week (Tuesdays and Thursdays), with volume of $10,000 planned to be allocated to each BDC.  Further details particularly regarding rates will be communicated by the CBN on April 3. With the move expected to improve liquidity in the FX market, we expect to see further convergence between official and parallel market rates. We note that the naira has appreciated 26% on the parallel market (currently at NGN383/USD) since the start of the recent persistent intervention by the CBN.

ASI rebounds as all sectors close higher

Weighty advances in blue chip stocks across all key sectors lifted the NSE ASI 105bps – the third positive three-digit d/d return so far this year. We believe the market will hold on to gains today given the sustained bid for a handful of mid-large cap stocks.

Stock Watch: Following a better-than-expected FY’16 earnings release, UBA gained 671bps over four consecutive sessions, taking the stock price to an over 2-year high of N5.76. The stock gained 286bps in yesterday’s trading session and currently trades at a P/E of 2.8x and P/B of 0.4x.

Bond yields march northwards in mixed session

Save for a few maturities, T-bill yields remained sticky amidst a muted   trading session. However, bearish sentiment became more apparent in the bond market as yields rose 6bps on average. For today, we expect the week long mixed trading pattern to persist. However, we foresee further cautious trading as investors take to the sidelines ahead of the Q2’17 bond calendar release.