April 24, 2017/Cordros Report

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EQUITIES

• The Nigerian equities opened the first trading session of the week positive, with both released (see WAPCO and STANBIC) and expected Q1-17 results (as we expected) acting as tailwind. The All Share Index advanced by 2.21% (largest this month) to close at 25,747.05 points.

• Today’s bullish performance swung the Month-to-Date (+0.90%) return into the green and reduced the Year-to-Date loss to 4.20%.

• The Industrial Goods (+6.30%) index recorded the largest gain, on the back of bargain hunting in DANGCEM (+3.77%) and WAPCO (+10.24%) shares, following the latter’s impressive Q1 financial results and positioning ahead of a similar performance by the former. Likewise, the Banking (+2.99%) and Oil & Gas (+0.13%) indices advanced, as investors bought into ZENITHBANK (+1.19%), STANBIC (+4.98%), FO (+1.12%) and OANDO (+0.19%) respectively. Conversely, the Consumer Goods (-0.04%) and Insurance (-0.15%) indices shed weight, as investors liquidated their holdings in NESTLE (-4.90%) and AIICO (-3.64%) correspondingly.

• Market breadth was positive, with 18 gainers, versus 11 losers. The total volume traded increased by 23.40% to 211.76 million shares, valued at N1.41 billion, and exchanged in 3,054 deals.

• Corporate Releases: Q1 2017 earnings – WAPCO (PAT: +375.55% y/y), STANBIC (PAT +106.31% y/y), and CAP (PAT: -7.39% y/y). 2016FY earnings – DIAMONDBNK (PAT:-38.14% y/y).

• We expect the market to close higher in tomorrow’s session, as investors continue to react positively to Q1 earnings.

CURRENCY

• In a follow up to the circular on the Investors and Exporters window, the CBN said it will now allow investors to engage in foreign exchange trading at rates the buyers and sellers set. The apex bank further stated that it will not provide the funds, but will intervene to keep the market orderly. Meanwhile, the apex bank offered USD150 million in a forward auction to be settled between 7 – 45 days. That said, the naira — in the interbank segment — gained against two of the currencies we track. The NGN/USD (+0.02%) and NGN/GBP (+0.86%) strengthened to N305.95 and N399.53 respectively, while the NGN/EUR (-1.04%) weakened to N331.91. The newly opened investors and exporters window closed at N377.11. In the parallel market the LCY weakened against dollar (-1.30%), pound (-1.02%), and euro (-1.22%) to N390, N495, and N415 respectively.

FIXED INCOME AND INTERBANK

• The money market overnight rate expanded by 5.34% to 34.67%, following today’s OMO auction wherein the CBN sold N10.00 billion across the 185-day (N0.12 billion vs. N5.00 billion offered) and 332-day (N9.88 billion vs.N10.00 billion offered) bills.

• Investors were upbeat in the treasury bills market, with average yield contracting by 28 bps to 18.24%. Yield at the short (-109 bps) end of the curve contracted, following demand for the 18-MAY-17 (-409 bps) and 25-MAY-17 (-350 bps) bills. Conversely, yields at the mid (+4 bps) and long (+1 bp) segment moved northward, as investors sold-off the 26-Oct-17 (+45 bps) and 30-NOV-17 (+16 bps) maturities respectively.

• Likewise, the bond market closed on a bullish note, as average yield contracted by 11 bps to 16.70%. Demand occurred across board, with yield at the short (-7 bps), mid (-11 bps), and long (-12 bps) end of the curve contracting. Some of the bonds in the spotlight were the JUL 2017 (-10 bps), JUL 2021 (-21 bps), and APR 2037 (-28 bps) maturities.