May 11, 2017/Cordros Research

EQUITIES

• The bulls maintained dominance   on the domestic bourse, with the All Share Index advancing by 3.18% (the largest daily gain since 15th June, 2016), to close at a record 8-month high of 28,423.70. Today’s gain was mainly driven by demand for blue chip stocks across the industrial goods and banking space.

• Today’s impressive performance increased the Month-to-Date and Year-to-Date gain to 10.35% and 5.76% respectively.

• The Industrial Goods  index rebounded, recording the largest gain of 4.31%,, on the back of bargain hunting in DANGCEM (+4.39%), WAPCO (+4.99%), and CCNN (+10.06%). Likewise, the Banking (+4.00%), Insurance (+0.06%), and Consumer Goods (+3.32%) indices extended gains, owing to demand for ZENITHBANK (+4.97%), GUARANTY (+4.99%), NEM (+4.085), MANSARD (+4.67%), NESTLE (+0.25%), and NB (+5.00%) respectively. The Oil & Gas (-2.28%) index closed lower as traders locked in their profits, particularly in SEPLAT (-9.75%) and OANDO (-0.31%).

• Market breadth remained positive, with 44 gainers versus 13 losers. The total volume traded increased by 37.14% to 801.08 million shares, valued at N7.82 billion, and exchanged in 6,481 deals.

• We look to further gains tomorrow to consolidate a bullish week.

CURRENCY

• At the time of writing, the naira – in the interbank market – declined against the euro (-0.17%) to N342.63, while it strengthened against the pound (+0.37%) to N408.90, and remained flat against the dollar at N305.60. In the parallel market, the LCY was unchanged against the dollar, pound, and euro at N390, N495, and N420 respectively. Meanwhile, the USD/NGN (-0.63%) weakened to N383.28 at the IEFX market.

FIXED INCOME AND INTERBANK

• The overnight rate contracted by 258 bps to 14.67%. The rate contraction was driven by inflows from maturing OMO bills worth N87.66 billion, which more than subdued the effect of today’s withdrawals via OMO auction, wherein the apex bank mopped up N25.82 billion across the 168-DTM (N1.78 billion) and 364-DTM (N24.04 billion) bills respectively.

• Investors remained downbeat in the T-bills space, with average yield expanding modestly (1 bp) to 18.42%. Yield at the mid (+ 6 bps) segment of the curve expanded, as investors sold-off the 14-SEP-2017 (+42 bps) and 5-OCT-2017 (+30 bps) bills. Yields at the short (-2 bps) and long (-1 bp) ends of the curve contracted, as investors demanded the 22-JUNE-2017 (-24 bps) and 3-MAY-2018 (-12 bps) maturities respectively.

• Conversely, proceedings were bullish in the bonds space, with average yield contracting by 8 bps to 16.83%. Yields contracted across the short (-9 bps), mid (-15 bps) and long (-6 bps) ends of the curve, driven by demand for the MAY 2018 (-17 bps), JUL 2021 (-19 bps), and MAR 2027 (-21 bps) bonds respectively. At yesterday’s primary auction, the DMO raised N110 billion (vs. planned N140 billion) across the JUL 2021 (N10 billion vs. N40 billion offered), MAR 2027 (N35 billion vs. N50 billion offered), and APR 2037 (N65 billion vs. N50 billion offered) maturities. Compared to the last auction, stop rates on the JUL 2021 (16.30%, previously 15.99%), MAR 2027 (16.29%, previously 16.24%), and MAR 2037 (16.30%, previously 16.25%) came in higher. Notably, the APR 2037 and MAR 2027 bonds were oversubscribed by N41.67 billion and N2.94 billion respectively, while the JUL 2021 bond was undersubscribed by N22.71 billion.