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Weekly Market Wrap - 16 March 2018

Banking stocks steer NSE ASI 285bps lower w/w                                         

The Nigerian equity market rounded off the week on a negative note, losing 59bps today (-285bps w/w) to trim ytd returns to 9.7%. With sell pressure persisting at session close, we believe weak sentiment will filter into trading at week open. However, we note that renewed interest in beaten down stock prices in addition to more positive earnings releases could improve market sentiment.

Stock Watch: STANBIC released its FY’17 results with top and bottom line up 36% y/y and 7% y/y – coming in closely in line with our expectation at ₦212 billion and ₦48 billion. The Group proposed a total dividend of ₦1.10 (2016: ₦0.05; Vetiva: ₦1.04). The stock currently trades at a price of ₦50.00 and has returned 20% ytd.   

                            

OMO announcement caps redemption-inspired demand                                           

The CBN released the Q2’18 T-bills calendar at the start of the week, indicating that half of the maturing bills will be redeemed (and refinanced through Eurobond proceeds). Overall, yields on T-bills and benchmark bonds declined 28bps and 17bps on average. We foresee continued CBN liquidity mop-up restraining demand in the fixed income market at week open. Meanwhile, the Debt Management Office will offer ₦70 billion across the 5-year, 10-year bond, and a new 7-year bond at the March bond auction Wednesday. This is lower than the ₦100 billion offered at the February auction.

On the currency front, the CBN continued its interventions, injecting $210 million across various windows of the inter-bank foreign exchange market at week open. Amidst these, the naira depreciated ₦0.50 in the parallel market and ₦0.25 at the I&E FX window to close at ₦361.50 and ₦360.57 respectively against the dollar. We expect liquidity to further improve as the CBN continues to inject foreign currency into the market.