May 31, 2017/Cordros Report

Click here to download PDF Report

EQUITIES

• Gains extended on the bourse, driven by demand for insurance and industrial goods stocks. The All Share Index advanced by 0.76% to close at 29,598.31 points (the highest this year).

• Today’s performance increased the Month-to-Date and Year-to-Date gains to 14.52% and 9.76% respectively. Interestingly, the market closed in the red on three trading sessions this month.

• The Insurance (+4.48%) index recorded the largest gain, following demand for MANSARD (+8.17%) and CUSTODYINS (+5.34%). Likewise, the Consumer Goods (+1.49%) and Industrial Goods (+1.87%) indices closed higher, as investors bought the shares of NESTLE (+0.58%) and DANGCEM (+4.73%) respectively. On the flip side, the Banking (-3.06%) and Oil & Gas (-2.35%) indices shed weight, as investors sold-off GUARANTY (-5.00%), ZENITHBANK (-2.82%), SEPLAT (-5.00%), and CONOIL (-0.29%) respectively.

• Market breadth was positive, with 31 gainers versus 19 losers. Total volume traded declined by 58.78% to 343.19 million shares, valued at N3.34 billion, and exchanged in 4,905 deals.

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

CURRENCY

• Yesterday the apex bank sold USD482.6m at the interbank market, a breakdown of the intervention revealed that (1) USD 285.7million was offered to the retail secondary market, (2) USD100 million was to the wholesale secondary market, (3) USD52 million to SMEs, and (4) USD45 million to cater for invisible. That said, today at the interbank market, the GBP/NGN (-0.02%) and EUR/NGN (-0.38%) weakened to N404.32 and N353, respectively, while the USD/NGN closed flat at N305.40. In the parallel market, the USD/NGN, GBP/NGN, and EUR/NGN closed flat at N382, N495, and N425, respectively. Meanwhile, The USD/NGN (+0.16%) strengthened to N380.50 at the IEFX market.

FIXED INCOME AND MONEY MARKET

• The overnight rate contracted by 10 bps to 12.33%, particularly driven by the expectation of maturing OMO bills tomorrow, worth N64.75 billion.

• Investors remained upbeat in the secondary market, with yield contracting by 7 bps to 18.79%.Yields contracted across all (short: -14 bps, mid: -5 bps, long: -4 bps) segments of the curve, as the 17-AUG-17 (-95 bps), 23-NOV-17 (-45 bps), and 30-NOV-17 (-48 bps) bills ,respectively, experienced notable yield contraction. The result of today’s primary auction was unavailable at the time of writing.

• Conversely, the bond market closed on a bearish note, as selloffs at the mid (+6 bps) and long (+1 bp) segments overshadowed demand at the short (-2 bps) end of the curve. In particular, yields on the JAN 2022 (+1 bp) and JUL 2034 (+4 bps) bonds respectively came under pressure, while the yield on the JUL 2017 (-2 bps) bond contracted owing to demand.  Overall, average yield expanded by 4 bps to 16.84%.