Weekly Market Wrap - 28 April 2017
Positive earnings spur NSE ASI to best week in 2017
The NSE ASI (+6bps) slowed to a flat close on Friday amidst market reaction to a slew of mixed earnings releases. However, the index returned 229bps w/w, posting its best weekly performance so far in the year. We anticipate increased market activity next week amidst continued investor reaction to earnings releases. Also, with most of the earnings announcement coming in better-than-expected, we expect the NSE ASI to open the new trading week in the green.
Stock Watch: DANGCEM released its Q1’17 result today. PAT came in at ₦71 billion, marking a 34% y/y rise and 36% ahead of market expectations. The stock however lost 68bps to close at ₦159.00, weighed down by losses prior to the announcement.
Bond maturity buoys system liquidity
Amidst sizable liquidity inflows from bond maturity (₦480 billion) at week close, the Central Bank of Nigeria (CBN) mopped up just under ₦200 billion through a series of OMO auctions held during the week. However, buoyed by the liquidity injection, bulls asserted themselves in the T-bills space during the week with yields moderating across the space. Meanwhile, though similarly strong buying interest was observed on bonds for the first half of the week, this cooled as the week progressed. Notably, trading activity was relatively muted at week close despite the improvement in liquidity. We anticipate more buying at the start of next week as market activity remains buoyed by the liquidity injection at week close.
At the start of the week, the CBN established a special window for “Investors & Exporters†as part of its efforts to boost liquidity in the foreign exchange (FX) market. Rates at this new window are tracked by FMDQ via the “NAFEX†fixing, with the currency closing the week at ₦379.04 at this window. We expect sustained CBN Secondary Market Intervention Sales to further support liquidity in the foreign exchange market. Meanwhile, we expect the introduction of the special window “NAFEX†fixing to further promote confidence in the FX market.
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