Following the Central Bank of Nigeria’s (CBN) $2.5 billion currency swap transaction with the People’s Bank of China (PBOC) in May 2018, CBN officials held a town hall meeting on Wednesday in Lagos to introduce the benefits of its recent swap ahead of plans to start auctioning the Chinese currency later in July. The apex bank is attempting to sway local businesses importing goods from China to use the yuan instead of the U.S. dollar in an effort to ease trade flows and pressure on the naira-dollar exchange rate. In our view, given the size of the swap compared to Nigeria’s annual imports from China (c.40% of total import bill), the primary benefits would come in terms of reducing the exchange rate risk by permitting direct naira-yuan conversion, eliminating double transaction charges, and easing of transaction processes.

Under sale at PMA amid buying in the secondary market

  • The CBN conducted a primary market auction yesterday, offering N171 billion and selling N102 billion across the 91DTM, 182DTM and 364DTM bills at respective stop rates of 10.00%, 10.50% and 11.51% (Previous: 10.20%, 10.50%, and 11.50%). Amidst this, Interbank Call rate declined 233bps to 17.00%.
  • Sentiment in the T-bills space was positive, with yields declining 7bps on average. Notably, yields on the 15DTM (-45bps to 12.55%), 85DTM (-33bps to 12.22%) and 197DTM (-35bps to 12.83%) bills declined. Trading in the bond space was mixed, with buying on short-dated bonds matched by sell pressure at the long end. Specifically, whilst yield on the 14.50% FGN JUL 2021 bond moderated 65bps to 13.46%, yields on the 12.40% FGN MAR 2036 and 16.2499% FGN APR 2037 bonds advanced 5bps and 11bps to settle at 14.25% and 14.26% respectively.
  • With rates at the PMA coming in slightly below secondary market levels and liquidity pressure easing, we foresee a slight buy bias in the T-bills space, whilst the mid-long end of the curve remains quiet.


  • The Nigerian equity market endured another bearish session – shedding 28bps – albeit with the banking sector notching a positive close.
  • The Banking (+57bps) sector was buoyed by gains in ZENITHBANK (+125bps) and GUARANTY (+101bps), which outweighed dips in UBN (-333bps) and ACCESS (-48bps). On the other hand, the Consumer Goods sector (-161bps) led the losers board following declines in UNILEVER (-682bps), NB (-255bps) and NESTLE (-66bps). Likewise, the Oil & Gas (-78bps) and Industrial Goods (-52bps) sectors shed points yesterday, on the back of losses in FO (-10.00%), CONOIL (-833bps), CCNN (-333bps) and WAPCO (-114bps).
  • Market breadth remained negative with 21 advances and 23 declines
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Market Outlook

  • Gains in large-cap banking stocks tempered losses yesterday. But with underlying negative sentiment still persisting (evidenced by low market turnover), we foresee another negative performance on the exchange.
  • Stock Watch: FO has shed 29% over the last thirteen sessions. The stock currently trades at a year-low of ₦26.10 (Target price: ₦77.75) and has declined 40% YTD, compared to a 3% decline in the Oil & Gas sector YTD.


Corporate Disclosures

  • The Board of Directors of Flour Mills of Nigeria Plc, have announced the scheduling of its annual general meeting. The meeting will be held on Thursday 30th August 2018 at Eko Hotel and Suites, Victoria Island, Lagos. The Board of Directors of Royal Exchange Plc, have notified the Nigerian Stock exchange of their closed period and are reminding all insiders that they are prohibited from trading in the company’s shares from 27 February 2018 until 24 hours after the release of the audited financial statements. They also announced the scheduling of a board meeting to hold on the 25 July 2018.
  • The Board of Directors of Oando Plc have announced the holding of its annual general meeting, scheduled for Friday, July 27, 2018, at Eko Hotels and Suites, Victoria Island, Lagos. Some of the points on the agenda will be the release of the year’s audited financial statements and the reports of the directors,
    auditors and committee.
  • The Board of Directors of Skye Bank Plc have notified the Nigerian Stock Exchange that the Central Bank of Nigeria has renewed the mandate of the bank’s board of directors for an additional two-year term until June 30, 2020.
  • The Board of Directors of Custodian Investment Plc have announced that its board of directors will be meeting on July 26, 2018. It was also announced the
    close of the half-year period ended June 30, 2018.
  • The Board of Directors of Unilever Nigeria Plc have announced the closure of its quarter period dated June 30, 2018. The company filed their unaudited interim financial statements for the quarter.