May 16, 2017/InvestmentOne Research

Please click to download the Market Report for Tuesday 16^th May 2017

        EQUITIES:

• The equities market closed positive today following yesterday’s profit taking. The market’s performance was driven by the gains in NB (+77pts), GUARANTY (+42pts), ACCESS (+14pts) and ZENITHBANK (+10pts), which more than offset the sell-off in SEPLAT (-56pts) and ETI (-13pts). Consequently, the NSE-ASI gained +0.35% to end at 27,609.67pts, representing a market capitalisation of N9.54tr.
• Market breadth index also closed positive at +0.06x as 23 stocks gained against 16 stocks that declined. INTBREW (+5.00%) was the market’s best performer while SEPLAT (-9.00%) led the losers’ chart.
• Although the Oil & Gas sector closed negative today, all other major sectors ended positive, led by the Industrial and Consumer Goods sectors both up +1.27%. The Banking sector also closed up, gaining +0.88%.
• With this said, market activity declined compared to yesterday as investors exchanged 569m units of shares worth N6.68bn, representing a -15% and -16% decrease in total volume and value respectively. ACCESS (+2.43%) was the most actively traded stock with c.175m units of shares accounting for c.31% of total volume.
• While the ASI performance would continue to see support from PFAs attempt to meet its minimum equity investment allocation of 10%, we expect the index to retrace a bit on expectation of profit-taking and concern over MSCI decision. Nonetheless, we see this presenting further entry opportunity in our recommended quality names.

CURRENCY:

• The NGN recorded a marginal 0.05% gain against the USD to end today’s session at N305.45 due largely to continued intervention sales by the CBN. The local unit however shed -0.21% and-1.85% against the GBP and EUR to N405.34 and N348.72.
• At the parallel market, the Naira was relatively stable against the USD, GBP and EUR to end today’s session at N385, N495 and N420 respectively.
• We expect NGN’s performance to continue to see support from FX sales by the apex as well as improved liquidity in the I & E window.

FIXED INCOME:

• In spite of OMO bills sales by the apex bank, both O/N and OBB contracted by over 100bps and 75bps respectively to end today’s session at 43% and 40% levels.
• In its continued bid to keep system liquidity under control, a total of c.N242m and c.N3.65b worth of 205-day and 359-day bills were sold by the apex bank in today’s auction at 18% and 18.6% stop rates respectively.
• We expect c.N41bn OMO maturity hitting the system on Thursday to support system liquidity. That said, given CBN’s continued control of liquidity in defence of the local currency, we expect sales of OMO bill to drain excess liquidity from the system.
• On account of limited system liquidity, the bond market was relatively bearish today, as yields inched up slightly on some of the tenors while some closed flat. While yields on the 5yr and 10yr benchmark bonds expanded by 14bps and 4bps to settle at 16.23% and 16.13% respectively, yield on the 7yr benchmark bonds was flat at 15.97%.

§  We expect activity in subsequent session to be influenced by liquidity level.

Below are key NSE statistics as at the end of trades:

 NASD Pricelist for Tuesday 16^th May, 2017