1/6/2017/Cordros Research

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EQUITIES

• The market continued to advance, reaching an 11 month high. Today’s gain was driven by demand for consumer goods and industrial goods stocks. The All Share Index gained 2.77% to close at 30,314.14 points.

• Today’s performance increased the Week-to-Date and Year-to-Date gains to 4.30% and 12.80%.

• Consumer Goods (+2.54%) and Industrial Goods (+2.45%) names were in high demand, particularly, NB (+4.95%), INTBREW (+4.99%), CHAMPION (+6.99%), DANGCEM (+5.00%), BETAGLAS (+4.99%), and CCNN (+4.95%) respectively. Likewise, the Banking (+1.70%) and Insurance (+1.50%) indices closed higher, following gains in ZENITHBANK (+2.90%), ACCESS (+5.53%), FBNH (+10.00%), CUSTODYINS (+4.23%), MANSARD (+4.89%), and AIICO (+3.85%) respectively. The Oil & Gas (-0.24%) bucked the trend, owing to selloffs in SEPLAT (-0.56%) and OANDO (-5.33%).

• Market breadth remained positive, 39 gainers versus 11 losers. Total volume traded increased by 26.59% to 434.43 million shares, valued at N4.63 billion, and exchanged in 5,107 deals.

• We expect gains to extend into tomorrow’s session, capping a bullish week.

CURRENCY

• At the time of writing, the naira had strengthened against two of the currencies we track. The GBP/NGN (+0.13%) and EUR/NGN (+0.16%) had strengthened to N405.16 and N353.13, respectively, while the USD/NGN (-0.02%) weakened to N305.45. In the parallel market, the naira was unchanged against the pound and euro at N490 and N425, respectively, while the USD/NGN (+2.09%) strengthened to N374. At the IEFX market, the USD/NGN closed flat at N380.50.

FIXED INCOME AND MONEY MARKET

• The overnight rate contracted by 291 bps to 9.42%. Inflows from maturing OMO bills, worth N64.75 billion, overshadowed the effect of today’s OMO auction, wherein the apex bank sold N12.93 billion, offering the 196-DTM (N0.23 vs. N5 billion offered) and 350-DTM (N12.70 billion vs. N10 billion offered) bills to investors.

• Investors were upbeat in the secondary market, following demand across all (short: -45 bps, mid: -21 bps, long: -3 bps) segments of the curve. Notably, the 15-JUN-17 (-405 bps), 9-NOV-17 (-96 bps), and 11-JAN-18 (-25 bps) maturities were in high demand. Overall, average yield contracted by 21 bps to 18.58%. At yesterday’s primary auction, the apex bank raised N117.15 billion. The stop rates on the 91-day (13.40%, previously 13.50%, %), 182- day (17.14%, previously 17.15%), and 364-day (18.65%, previously 18.70%) bills came in lower relative to the last auction. Notably, the 91-day, 182-day, and 364-day were oversubscribed by N0.36 billion, N 0.54 billion, and N83.74 billion, respectively.

• Likewise, investors were upbeat in the bond market, particularly at the short (-31 bps) end of the curve. Demand for the AUG 2017 (-154 bps) bond was high. Conversely, yield expanded at the mid (+6 bps) and long (+1 bp) ends of the curve, as investors sold-off the JUL 2021 (+1 bp) and MAR 2027 (+3 bps) bonds respectively. Overall, average yield contracted by 8bps to 16.72%.