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Weekly Market Wrap - 24th March 2017

Bearish week sees ASI slump to losses

Losses across most key sectors dragged the NSE ASI 23bps lower at the close of today’s trading session, extending the week’s loss to 77bps. With more earnings expected in the next week, we foresee mixed trading sessions amidst investor reactions to the numbers. Meanwhile, today’s negative market breadth (-10) and lower closes across most key sectors indicate weak investor sentiment. As such, we believe the NSE ASI would open lower in the week ahead.

T-bills reverse bearish trading on liquidity boost

Trading in the bond market continued bullish at week close with yields declining 9bps on average. Also, yields reversed direction in the T-bills market as inflows from FAAC and Paris Club refund to select states boosted system liquidity. We expect the market to continue bullish at the start of the coming week (barring any liquidity mop up by the CBN) as the ease in system liquidity further supports demand.

On currency front, the CBN continued to flood the FX market, offering a total of c.$380 million in forwards and spot delivery over the course of the week. Supported by the sustained intervention, the naira strengthened further on the parallel market, exchanging at a rate of NGN390/USD as at the time of writing compared with the NGN450/USD it exchanged for last week Friday. In contrast, the currency lost ₦0.50 in the official market to close at ₦307.00 against the dollar. We expect the naira to sustain the positive momentum, particularly in the parallel market given the sustained CBN intervention.