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The Market Today - 3rd March 2017

CBN to clear backlog of dollar demand via special SMIS
The CBN announced a special Secondary Market Intervention Sale to clear a backlog of matured FX obligations through a multiple-price book building process for Raw materials and Machineries, Agriculture, Airlines and Petroleum Products. The FX obligations for Petroleum Products must have matured before September 30, 2016. The apex bank also stated that Authorised Dealers’ accounts will be debited in full for the Naira equivalent of the dollar bid amount on a spot basis, whilst the CBN will settle the bids through forward settlements of 2 months. We highlight that the naira has strengthened in the parallel market given the sustained intervention by the CBN in the FX market and we believe the currency could maintain this momentum given the improved market liquidity.

DANGCEM singlehandedly pulls NSE ASI under water
The Nigerian Bourse continued its bearish start to the month of March, declining much steeper this time (NSE ASI down 140bps) as sharp sell-offs in market heavyweight DANGCEM upturned gains across other key sectors. We expect the market to bounce back at week close supported by improved investment sentiment across a number of market blue chips.

Stock Watch: Despite announcing a y/y PAT growth of 23% and a final dividend of ₦1.77, ZENITHBANK has been under significant sell pressure, shedding 600bps since the announcement date.We however highlight the modest improvement in the dividend yield – 13% vs. 12% at announcement and could be better given sustained weakness in the stock. Closure date is slated for March 13, 2017.

Bearish sentiment persists amidst thin system liquidity
Considering the persistent liquidity mop up and with market participants anticipating CBN Secondary Market Intervention Sales, we anticipate muted buying interest in the fixed income space in the coming session.