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Weekly Market Wrap - 31st March 2017

​NSE ASI returns -5.05% for Q1’17
The Nigerian equity market closed marginally lower in the last trading session of the quarter as the NSE ASI dipped (7bps) following losses in select market blue-chips. Although the market closed lower today, we highlight that it was largely spearheaded by declines in the two large caps earlier highlighted – NB and GUARANTY. Nonetheless, investor appetite was relatively upbeat even as market breadth remained positive (24 advances vs 18 declines). As such, we believe the ASI would rebound at the start of the week ahead.

  Tighter liquidity dampens demand
Overall, the fixed income market traded bearish in the past week with CBN interventions putting pressure on liquidity over the course of the week. We expect activity in the T-bills space to remain pressured at week, especially at the short end of the space. Meanwhile, with the Q2’17 bond calendar expected within the next week, we foresee cautious trading in the bond market as investors await clarity on the next quarter’s supply. 

  On the currency front, the Central Bank of Nigeria (CBN) on Monday revised the rate at which it sells dollars to Deposit Money Banks (DMBs) for invisible retail transactions from NGN370/USD to NGN357/USD. It also capped the rate that DMBs can sell to retail end-users for invisible transactions at NGN360/USD (Previous: NGN375/USD). Despite the currency depreciation in the parallel market at week close, we expect continued CBN interventions to continue to boost FX liquidity and ease demand on the naira