April 18, 2017/Cordros Research

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EQUITIES

• The Nigerian equities market closed lower, owing to selloffs of major banking and industrial goods stocks. The All Share Index shed 1.19% to close at 25,207.07 points.

• Today’s negative performance increased the Month-to-Date and Year-to-Date losses to 1.21% and 6.20% respectively.

• The Banking (-1.45%) and Industrial Goods (-1.11%) indices closed lower, owing to selloffs in GUARANTY (-0.81%) and DANGCEM (-2.44%) respectively. Likewise, the Consumer Goods (-0.74%) and Insurance (-0.43%) indices shed weights, as investors liquidated their holdings in NESTLE (-2.92%) and MANSARD (-0.66%) respectively. However, the Oil & Gas (+0.52%) index bucked the trend, bolstered by gains recorded in SEPLAT (+2.56%).

• Market breadth was negative, with 14 gainers versus 18 losers. The total volume traded declined by 27% to 254.96 million shares, valued at N2.45 billion, and exchanged in 2,854 deals.

• Corporate Releases: 2016FY earnings: PRESCO (PAT: +771.65% y/y) and ETI (PAT: -347.50%). Q1 2017 earnings: UNILEVER (PAT: +53.94%).

• We expect activities in the equities market to be guided by the gradual release of Q1 results.

CURRENCY

• In its continued bid to improve FX liquidity, the apex bank offered USD100 million in FX forward contract maturing between 7 – 45 days. Asides that, it was business as usual in the currency space, with the naira declining against two of the currencies we track. The NGN/GBP (-2.46%) and NGN/EUR (-2.48%) weakened to N400.90 and N326.64, while the NGN/USD (+0.02%) strengthened to N306.00. In the parallel market, the LCY strengthened against the dollar (+0.73%), pound (+0.60%), and euro (+1.15%) to N407, N497, and N430 respectively.

FIXED INCOME AND INTERBANK

• The money market overnight rate expanded by 83.17% to 150%, from last week’s close of 66.83%. We attribute the surge in rates to (1) today’s OMO sales, wherein the apex bank sold N65 million (vs. N5.00 billion offered) and N381.70 million (vs. N10.00 billion offered) of the 177 day and 331 day bill respectively, and (2) debit for the sale of FX forward contracts.

• Activities in the treasury bills market closed on a bearish note, with average yield expanding by 32 bps to 18.43%. Yields at the short (+89 bps), mid (+4 bps), and long (+18 bps) segments of the curve were pressured, as the 25-MAY-17 (+409 bps to 19.84%), 21-SEP-17 (+27 bps to19.00%), and 18-JAN-18 (+100 bps to 19.45%) bills were respectively sold-off.

• Likewise, the bond market was bearish, with average yield expanding by 7 bps to 16.74%. Yields at the short (+26 bps), mid (+3 bps), and long (+2 bps) ends of the curve expanded, as investors sold-off the APR 2017 (+80 bps to 15.12%), FEB 2020 (+7 bps to 16.16%), and MAR 2024 (+14 bps to 15.98%) maturities respectively.