May 22, 2017/InvestmentOne Research
Trade ideas for the week
- We remain positive on both quality Banking and cement stocks on continued elevated interest rate regime and potential for increased government capex spending.
- While recent rally has seen valuation a bit stretched, we still see on the average c.15% potential upside in UBA, ZENITHBANK, ACCESS and DANGCEM.
- We point out that GTB remains our core holding over the medium to longer term.
- We expect Consumer names’ earnings to see support from price hike and recent reforms in the FX market.
- In the near term, the ASI performance would continue to see support from recent reforms in the FX market leading to establishment of I & E window as well as new PFA guideline which required increased investment allocation to equity.
§ With that being said, we highlight potential for profit-taking on the index. Nonetheless, we see this presenting entry opportunities in our recommended quality names.
§ Hence, we advise investors to stick to quality names over an extended investment horizon.
Our Picks
- Dangcem, GTB, Zenith, Access and Nestle
The week in review
- ASI shed -0.28% (28bps) w/w
- Yields on FGN bond remained at 16% due to limited system liquidity.
- At the parallel market, Naira gained +1.6% w/w to end the week at N380/$.
- MSCI maintained status quo regarding Nigeria equities on its index.
- April headline CPI declined mildly to 17.24% from 17.26% in March
- Brent oil price remained at $50pb, as US crude inventory data and OPEC news weighed
The week ahead
- Monetary Policy Committee meeting to hold between 22nd and 23rd of May 2017
- NBS to publish Q1 2017 GDP Data
- Data on April 2017 FAAC disbursement to be published by NBS 24th May
