April 19, 2017/Cordros Research

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EQUITIES

• The Nigerian equities market closed higher, following demand for banking and consumer goods stocks.  The All Share Index increased by 0.49% to close at 25,331.77 points.

• Today’s bullish performance reduced the Month-to-Date and Year-to-Date losses to 0.72% and 5.74% respectively.

• The Banking (+0.84%), Consumer Goods (+0.84%), and Industrial Goods (+0.01%) indices closed higher, after investors bought into GUARANTY (+1.35%), NESTLE (+3.01%), and PORTPAINT (+3.85%) respectively. On the negative, the Insurance (-0.40%) index declined, owing to selloffs in MANSARD (-0.66%), while the Oil and Gas index closed flat.

• Market breadth was positive, with 15 gainers versus 13 losers. Total volume traded increased by 26.41% to 322.30 million shares, valued at N1.53 billion, and exchanged in 2,907 deals.

• Corporate Releases: Q1-2017 earnings: NSLTECH (PAT: +18.24% y/y) and UCAP (PAT: +3.02% y/y).

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

CURRENCY

• Further to yesterday’s FX forward sales of USD100 million, the central bank also sold USD100 million to small and medium enterprises (SME’s) and USD80 million to end users for the purchase of invincibles. Also, the Chief Economist of World Bank for Africa has advised Nigeria to reform its finance to enable it hedge against future currency crisis. Meanwhile, it was business as usual in the currency space, with the naira weakening against the pound (-0.74%) and euro (-3.95%) to N404.19 and N340.05 respectively, while it remained flat against the dollar at N306.00. In the parallel market space, the NGN/USD (+1.72%) and NGN/EUR (+2.33%) strengthened to N400 and N420 respectively, while the NGN/GBP was flat at N497.

FIXED INCOME AND INTERBANK

• The money market overnight rate contracted by 16.67% to 133.33%, from its previous close of 150.00%, following the expectation of  OMO bills worth N25.57 billion maturing tomorrow.

• The treasury bills market was relatively quiet, closing with a bearish bias. Yields on 70% of traded bills were unchanged from yesterday. Average yield expanded by 9 bps to 18.52%, following selloffs at the short (+31 bps) and mid (+5 bps) ends of the curve. The upward movement in yield at each respective end was driven by the 27-Apr-17 (+305 bps) and 27-JUL-17 (+53 bps) maturities. Demand for the 11-JAN-18 (-71 bps) bill caused yield to contract at the long (-1 bp) end. The result of today’s primary auction was not available at the time of writing.

• Conversely, investors were upbeat (albeit marginally) in the bond market, with average yield contracting by 1 bp to 16.73%.  Snippets of demand at the short (-7 bps) end — driven by investors buying into the AUG 2017 (-25 bps) maturity — overshadowed selloffs at the mid and long (+1 bp apiece) ends of the curve, with the JUL 2021 (+10 bp) and MAY 2029 (+1 bp) recording the largest expansion in yield at each respective end.