23/5/2017/Cordros Research

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EQUITIES

• The market closed higher, despite a reported contraction (for the fifth consecutive quarter) in Nigeria’s GDP in Q1-2017. Indeed, investors shifted focus to recent positive developments in the macroeconomic space including relative stability in the foreign exchange market. The All Share Index advanced by 0.05% to close at 28,093.30 points.

• Today’s performance increased the Month-to-Date and Year-to-Date gains to 9.06% and 4.53% respectively.

• The Insurance (+1.33%) and Consumer Goods (+0.66%) indices closed higher, due to demand for the shares of MANSARD (+4.43%), CONTINSURE (+1.57%), NESTLE (+1.67%), and NB (+2.24%) respectively. On the flip side, the Oil & Gas (-0.36%), Industrial Goods (-0.26%), and Banking (-0.14%) indices shed weight, following selloffs in TOTAL (-3.70%), OANDO (-1.10%), DANGCEM (-0.61%), CCNN (-4.55%), ACCESS (-0.68%), and UBA (-3.19%) respectively.

• Market breadth remained positive, with 23 gainers versus 18 losers. Total volume traded increased by 2.09% to 212.69 million shares, valued at N2.18 billion, and exchanged in 3,908 deals.

• We expect the market to advance further in tomorrow’s session, partly supported by today’s positive market breadth – which speaks to investor interest.

CURRENCY

• Further to yesterday’s auction, the apex bank also injected USD105 million into the interbank market; selling USD50 million to cater for basic travel allowances and USD55 million to meet the needs of SMEs. At the time of writing, the naira had appreciated against the three currencies we track. The USD/NGN (+0.02%), GBP/NGN (+0.16%) and EUR/NGN (+0.02%) strengthened to N305.40, N412.06 and N353.52 respectively. In the parallel market, the USD/NGN, GBP/NGN, and EUR/NGN closed flat at N381, N490, and N420 respectively. Meanwhile, the USD/NGN (+0.07%) strengthened to N382.31 at the IEFX market.

FIXED INCOME AND MONEY MARKET

• The overnight rate surged 98.84% to 121.67%. We attribute today’s movement in rate to (1) commercial bank debit for FX sales, and (2) today’s OMO auction, wherein the apex bank sold N8.06 billion, offering the 198-DTM (N0.28 billion vs. N5 billion offered) and 345-DTM (N7.78 billion vs. N10 billion offered) bills to investors.

• Investors were upbeat in the T-bills market, with yield contracting across all (short: -7 bps, mid: -8 bps, and long: -1 bp) segments of the curve. The 29-JUN-17 (-59 bps), 21-SEP-17 (-70 bps), and 1-MAR-18 (-19 bps) bills recorded notable yield contraction. Overall, average yield contracted by 4 bps to 19.00%.

• Conversely, the bond market closed on a bearish note. Today’s performance was driven by selloffs at the short (+6 bps) and long (+3 bps) segments of the curve, in particular the AUG 2017 (+30 bps) and APR 2037 (+16 bps) bonds respectively. There was  modest demand at the mid (-6 bps) segment, with the JAN 2022 (-10 bps) bond attracting the most interest.