The Market Today - 4 August 2017
Banks
begin to show currency quotes on screen
In
a bid to improve transparency and liquidity in the FX market, FMDQ Securities
exchange authorized foreign exchange dealers to begin to show currency quotes
on the Bloomberg screens rather than the typical over-the-phone quoting system.
We highlight that whilst most market participants had applauded the
introduction of the I&E window, the transparency around price discovery was
a major concern. This move is expected
to boost liquidity in the currency market and ensure a minimization of rates
distortion. With the ongoing economic recovery widely credited to the
improvements in currency space, we expect this move to further buoy investor
confidence as market liquidity and transparency deepen.
Resurgent
demand in large caps lifts ASI 62bps
With
market sentiment mostly positive across key sectors yesterday, the Nigerian
equity market rose 62bps. We expect another positive session at week close as
intraday trading indicated sustained bullish sentiment and the bid & offer
cart showed resurgent demand on blue chips.
Stock Watch: UACN released H1’17 results last Friday, showing a 55% y/y decline in PAT – 40% behind Consensus estimate. Despite this, the stock has gained 6% in four sessions this week. UACN currently trades at ₦17.50, below Consensus target price of ₦22.13, and has returned 4.1% ytd.
Market
buoyed as FMDQ lifts suspension on two-way quote
The
CBN conducted another OMO auction yesterday, this time offering ₦110 billion
and selling ₦138 billion across the 189DTM and 364DTM bills at respective stop
rates of 17.95% and 18.55% (effective yields: 19.79% and 22.76%). With the
two-way quotes system resuming in yesterday’s session, the T-bills market
turned as stronger buying momentum across the short to mid dated bills drove
yields 26bps lower on average. In contrast, the bond market traded mixed amidst
little yield movement across the curve. Considering strong demand during
yesterday’s trading, we anticipate sustained buying momentum on bills at week
close. However, we expect trading activity to remain tepid in the bond market.
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