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The Market Today - 7th March 2017

​CBN continues to clear dollar demand backlog

• Consistent with its efforts to boost liquidity in the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) yesterday sold nearly $370 million in forwards for 45-day and 60-day tenors. The move follows a total forwards sale of over $500 million last week, and a CBN directive to commercial banks to process PTA/BTA dollar demand within 24 hours whilst maintaining teller points for retail FX transactions. Whilst we expect this move to further trim backlog of dollar demand and offer some support to the naira in the parallel market, we continue to reiterate that a more comprehensive FX policy would provide a more sustainable fix.
• A year after the last trade surplus in Q4’15, Nigeria’s current account threw up a positive number in Q4’16 (₦0.67 trillion) for the only time in 2016 as a 28% rise in exports and 6% decline in imports improved the country’s external trade position. For the whole of 2016, exports amounted to ₦8.5 trillion whilst imports were ₦8.8 trillion, bringing the annual current account deficit to ₦0.29 trillion or -0.29% of 2016 GDP.

Market Outlook

• Save for DANGCEM, most of the other market blue chips were on the bid cart at yesterday’s trading session. As such, we believe a rebound could be on the cards today even as we do not expect another steep decline in DANGCEM.
• Stock Watch: ACCESS FY’16 PAT (FY’16: ₦71 billion, FY’15: ₦65 billion) came in 7% off Bloomberg consensus (pressured by higher than expected tax expense). The Board of Directors proposed a final dividend of ₦0.40/share (Interim: ₦0.25) translating to a 11% dividend yield for 2016. Given that the bank’s performance was strong save for the higher tax provision, we do not rule out possible recovery in subsequent trading days.