May 24, 2017/Cordros Research

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EQUITIES

• In line with our prognosis, gains extended on the domestic bourse. The All Share Index advanced by 0.69% to 28,286.43 points.

• Today’s performance increased the Year-to-Date and Month-to-Date gains to 9.81% and 5.25% respectively.

• The Banking (+1.47%) and Insurance (+0.66%) indices closed higher, as investors bought the shares of ZENITHBANK (+1.69%), GUARANTY (+1.46%), MANSARD (+4.85%), and NEM (+0.96%) respectively, Likewise, the Consumer Goods (+0.72%) and Oil & Gas (+0.31%) indices gained, owing to demand for NB (+1.39%), INTBREW (+4.86%), SEPLAT (+4.64%), and TOTAL (+0.02%) respectively. The Industrial Goods (-0.68%) index bucked the trend, following selloffs in MEYER (-4.11%).

• Market breadth remained positive, with 27 gainers versus 19 losers. Total volume traded increased by 4.35% to 311.28 million shares, valued at N3.46 billion, and exchanged in 4,194 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

• It was disclosed that the apex bank (1) injected USD186.5 million into the interbank market yesterday, selling USD36.5 million, USD 100 million and USD50 million to meet demand for invisibles,  SMES, and   wholesale consumers respectively, and (2) planned to auction an undisclosed amount of dollars to settle a backlog of foreign exchange demand for airlines, fuel and raw material importers. However, the result of the auction was unavailable at the time of writing. Meanwhile, the naira strengthened against two of the currencies we track in the interbank market. At the time of writing, the GBP/NGN (+1.89%) and EUR/NGN (+1.60%) strengthened to N410.64 and N352.40 respectively, while the USD/NGN (-0.16%) weakened to N305.90. In the parallel market, the USD/NGN gained 0.26% to trade at N380, while the GBP/NGN and EUR/NGN remained flat at N490 and N420 respectively. Meanwhile, the USD/NGN (+0.13%) strengthened to N381.81 in the IEFX market.

FIXED INCOME AND MONEY MARKET

• The overnight rate expanded further by 16.66% to 183.33%. 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 N0.98 billion, offering the 197-DTM (Nil vs. N5 billion offered) and 309-DTM (N0.98 billion vs. N10 billion offered) bills to investors.

• Selloffs resurfaced in the T-bills market amid the continued pressure on system liquidity. Yields at the short (+11 bps) and long (+4 bps) segments of the curve were pressured, as investors sold-off the 13-JUL-17 (+74 bps) and 23-NOV-17 (+58 bps) bills respectively. While demand was modest at the short (-2 bps) end, owing to demand for the 14-SEP-17 (-105 bps) maturity. Overall, average yield inched upward by 4 bps to 19.04%. 

• Likewise, investors were downbeat in the bond market, with average yield expanding by 1 bp to 16.93%. Yields at the short (+2 bps) and mid (+6 bps) segments of the curve expanded, with the JUL 2017 (+16 bps) and JAN 2022 (+6 bps) bonds recording notable yield expansion. Activity at the long (-1 bp) end of the curve was modest, with the JUL 2034 bond contracting by 1 bp.