June 6, 2017/Cordros Research

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EQUITIES

• The market closed lower, following profit taking, particularly in the shares of DANGCEM and MOBIL. The All Share Index shed 1.16% to close at 32,200.38 points.

• Today’s performance reduced the Month-to-Date and Year-to-Date gains to 9.16% and 19.82% respectively.

• The Industrial Goods (-0.77%) and Insurance (-0.22%) indices closed lower, as investors liquidated their holdings in DANGCEM (-5.00%), CAP (-0.24%), MANSARD (-4.44%), and CUSTODYINS (-1.52%) respectively. Conversely, the Banking (+0.27%), Consumer Goods (+0.85%), and Oil & Gas (+0.20%) indices extended gains, following demand for STANBIC (+1.82%), ACCESS (+0.53%), NB (+0.32%), 7UP (+2.31%), SEPLAT (+5.00%), and FO (+2.17%) respectively.

• Market breadth continued to be positive, with 38 gainers versus 22 losers. The total volume traded increased by 16.33% to 74.99 million shares, valued at N6.52 billion, and exchanged in 7,841 deals.

• We expect gains to resurface on the bourse tomorrow, partly supported by today’s positive market breadth– which speaks to continued buying interest.

CURRENCY

• In its continuous stride to achieve rate convergence, the apex bank (1) sold USD190 million to the interbank segment of the market yesterday, consisting of wholesale interventions (USD100 million), sales to SMEs (USD50 million), and sales to end users for invisibles (USD40 million), and (2) issued new directives to further liberalize the forex market. The circular states that (a) authorized dealers may defease their excess FX currency trading positions to other authorized dealers, without seeking prior approval from CBN, and (b) all inter-bank transactions shall be subject to a maximum spread of N1.00. That said, the naira — in the interbank market — appreciated against the pound (+0.21%) to N405.92, and weakened against the euro (-0.14%) to N354.68. The naira was unchanged against the dollar at N305.55. In the parallel market, the USD/NGN and EUR/NGN were flat at N372 and N410 respectively, while the GBP/NGN (+1.04%) strengthened to N475. Meanwhile, the USD/NGN (-0.20%) weakened to N378.67 at the IEFX market.

FIXED INCOME AND MONEY MARKET

• The overnight rate expanded by 2.83% to 12.50%, as the apex bank mopped up N18.27 billion from the system via the sale of OMO bills (N0.18 billion of the 191-DTM and N18.09 billion of the 345-DTM) to investors.

• The T-bills market closed on a bullish note, with average yield contracting by 12 bps to 18.35%. Yield contraction occurred across all (short: -22 bps, mid: -7 bps, and long: -8 bps) segments of the curve, as the 3-AUG-17 (-121 bps), 9-NOV-17 (-39 bps), and 11-JAN-18 (-34 bps) maturities were in high demand.

• The bond market closed on a bearish note, with average yield expanding by 11 bps to 16.87%. Yield expanded at the short (+32 bps) segment of the curve, following selloffs, most notably in the AUG 2017 (+167 bps) bond. Demand was modest at the mid and long( -1 bp apiece) segments, with the JUL 2021 (-4 bps) and APR 2037 (-1 bps) recording notable yield contraction.