April 6, 2017/Cordros Update

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EQUITIES

• The Nigerian equities market closed higher, with the All Share Index advancing by 1.11% to 25,755.18 points.

• Today’s positive performance swung the Week-to-Date (+0.94%) return into the green and reduced the Year-to-Date loss to 4.17%.

• The Industrial Goods (+3.25%) index recorded the largest gain, owing to investors buying into WAPCO (+5.00%) and DANGCEM (+2.17%). Likewise, the Consumer Goods (+0.36%), Oil & Gas (+1.41%), Banking (+0.54%), and Insurance (+0.50%) indices appreciated, following demand for 7UP (+9.40%), MOBIL (+3.66%), GUARANTY (+2.04%), and CONTINSURE (+4.31%) respectively.

• Market breadth was positive, with 19 gainers compared to 18 losers. Total volume traded increased by 52.24% to 241.62 million shares, valued at N1.49 billion, and exchanged in 3,339 deals.

• We expect the market to close the week in the green, as investors continue to take advantage of cheap valuation.

CURRENCY

• The apex bank announced earlier in the day that it would sell USD100 million in 60-day currency forwards at the interbank market through commercial lenders. Asides that, it was business as usual in the currency market, with the naira — in the interbank space — strengthening by 0.08% against the pound to N398.44, while it weakened by 3.65% against the euro to N337.54. The LCY was flat against the dollar at N306.20. In the parallel market space, the NGN/USD (+0.25%) strengthened to N397.00, while the NGN/EUR (-1.20%) weakened to N420.00. The NGN/GBP was flat at N485.00.

FIXED INCOME AND INTERBANK

• The money market overnight rate expanded by 208bps to 14.58%, from yesterday’s close of 12.50%, following today’s OMO auction, wherein the apex bank offered the 189-DTM (N10.00 billion) and 308-DTM (N20.00 billion) bills, and sold N3.35 billion and N20.91 billion respectively. The increase in rate also mirrored a reported drop in system liquidity to N35.07 billion, from yesterday’s close of N62.20 billion.

• Activities in the treasury bills space were mixed, closing with a bearish bias. On average, yield moved northward by 2 bps to 17.41%, following selloffs at the short (+2 bps) and long (+1 bp) ends of the curve. The 4-MAY-17 (+111 bps) and 4-JAN-18 (+7 bps) bills came under the most pressure at both ends. At the long (-1bp) segment of the curve, the 3-AUG-17 (-23 bps) experienced the largest yield contraction. At yesterday’s NTB auction, the apex bank fully allotted N234.89 billion across the 91-DTM (N35.00 billion), 182-DTM (N33.49 billion), and 364-DTM (N166.40 billion) bills. The stop rate on the 91-DTM (13.55% vs. 13.55%) was unchanged from the previous auction, while the stop rate on the 182-DTM (17.21% vs. 17.20%) and 364-DTM (18.74% vs. 18.69%) came in higher than the previous auction. Noteworthy, the 91-DTM, 182-DTM, and 364-DTM bills were oversubscribed by N2.5 billion, N1.2 billion, and N0.37 billion respectively.

• Likewise, investors were downbeat in the bond market, with average yield expanding by 12bps to 1.30%. Yields at the short (+49 bps), mid, and long (+1 bp apiece) ends of the curve were pressured, as investors sold-off the APR 2017 (+129 bps), JAN 2022 (+4 bps), and MAR 2036 (+2 bps) maturities respectively.