The Nigerian equity market posted a strong performance in the first quarter of the year, advancing 8.5%, driven by a 16.3% rally in the first three weeks of January amid stronger than expected oil prices, and a positive outlook for 2018 company earnings. After that bull streak, the Nigerian Stock Exchange (NSE) suffered from largely bearish sentiment, losing in both February (228bps) and March (421bps). Despite the recent bearish trend, we anticipate another modest performance in Q2’18, driven by improving economic landscape and expectation of better Q1’18 earnings. In particular, Tier 2 Banks should benefit from a low base in 2017 whilst energy diversification and economic recovery should continue to support Industrial stocks – the highest gainer ytd (+10.9%). Primary headwinds to this outlook are policy instability and a reversal in economic sentiment, perhaps due to a sizable retreat in global oil prices.

Equity: After four consecutive sessions of losses, the Nigerian equity market rose 172bps (+8bps w/w), rounding off the holiday-shortened week on a cheery note. Despite last week’s positive close, we note that market breadth stayed negative (25 advances, 29 declines), indicating sustained tepid trading sentiment. Thus, we foresee a mixed session today, albeit with a positive bias given the resurgence of interest on select large caps.

Stock Watch: FO released its FY’17 results with the top line down 13% to ₦129 billion and bottom line up 323% to ₦12 billion – 4% behind and 94% ahead of our expectations respectively. The stock currently trades at a price of ₦42.00 and has declined 3% ytd.

Fixed Income: Whilst system liquidity at the end of last week remained supportive of demand, we foresee a quiet start to the week as market participants turn cautious ahead of the MPC meeting scheduled for today and tomorrow. Meanwhile, the CBN is set to conduct a T-bills PMA this week, offering ₦190 billion across the 91DTM, 182DTM, and 364DTM bills.