May 22, 2017/Cordros Report

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EQUITIES

• The market closed lower, owing to profit-taking (following four straight sessions of gains) in banking and consumer goods stocks. The All Share Index shed 0.12% to close at 28,078.30 points.

• Today’s performance reduced the Month-to-Date and Year-to-Date gain to 9.01% and 4.48% respectively.

• The Banking (-0.03%) and Consumer Goods (-0.74%) indices closed lower, as traders sold-off the shares of ZENITHBANK (-1.06%), UBA (-0.96%), ETI (-5.00%), NB (-2.17%), 7UP (-0.01%), and CADBURY (-4.98%) respectively. Conversely, the Oil & Gas (+0.38%), Industrial Goods (+0.05%), and Insurance (+0.09%) indices advanced, owing to demand for SEPLAT (+1.41%), TOTAL (+1.89%), DANGCEM (+0.01%), CCNN (+5.00%), AIICO (+1.92%), and CONTINSURE (+0.79%) respectively.

• Market breadth was positive, with 27 gainers versus 17 losers. Total volume traded declined by 31.91% to 208.34 million shares, valued at N3.74 billion, and exchanged in 3,498 deals.

• We expect the market to close higher tomorrow, partly supported by today’s positive market breadth – which suggests potential investor interest.

CURRENCY

• The apex bank earlier planned to sell USD100 million at a special wholesale spot and forwards auction, however, the result of the auction was unavailable at the time of writing. Aside that, it was business as usual in the FX space, with the naira strengthening against two of the currencies we track. The GBP/NGN (+0.08%) and EUR/NGN (+0.07%) strengthened to N412.71 and N354.20 respectively, while the USD/NGN remained flat at N305.45. In the parallel market, the GBP/NGN and EUR/NGN remained flat at N490 and N420 respectively, while the USD/NGN (-0.26%) weakened to N381. Meanwhile, the USD/NGN (-0.25%) weakened to N382.56 at the IEFX market.

FIXED INCOME AND MONEY MARKET

• The overnight rate contracted by 3.25% to 22.83%, despite the apex bank mopping up N4.55 billion from the system, through OMO bill (N0.41 billion of the 199-DTM bill and N4.41 billion of the 304-DTM bill) sales to investors.

• The T-bills market closed on a bullish note, driven by demand at the short (-22 bps) and long (-1 bp) ends of the curve, in particular, the 20-JUL-17 (-137 bps) and 4-JAN-18 (-20 bps) bills respectively. There was a modest selloff at the mid (+2 bps) segment, with the 28-SEP-17 (+96 bps) bill recording the largest yield expansion. Overall, average yield contracted by 5 bps to 19.04%.

• Likewise, investors were upbeat in the bond market, with average yield moving southward by 4 bps to 16.89%. Yields at the short (-7 bps), mid (-3 bps), and long (-2 bps) ends of the curve contracted, owing to demand for the MAY 2018 (-74 bps), JUL 2021 (-6 bps), and APR 2037 (-13 bps) bonds respectively.