June 12, 2017/InvestmentOne Research

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EQUITIES:  

• Following the profit taking in NESLTE (-92pts), INTBREW (-27pts) and FBNH(-26pts) which more than offset the gains in ACCESS (+30pts), PZ (+24pts) and NB (+23pts), the equities market closed down -0.12% to end at 33,235.28pts.
• Furthermore, market breadth index, a measure of investor sentiment, closed negative (-0.09x) as 30 stocks declined against 20 stocks that gained. ASHAKACEM (+10.09%) led the gainers’ chart while INTBREW (-8.63%) was the market’s worst performer.
• Major sector performance was mixed at close today as the Consumer Goods (-1.08%) and Oil & Gas (-1.14%) sectors declined while the Banking (+0.46%) and Industrial (+0.07%) sectors gained.
• While the total value of shares exchanged was flat at N6.1bn compared to last Friday, total volume of shares exchanged fell by -27% to 501m units of shares. The Banking sector accounted for 70% of total volume with ACCESS (+3.46%) the most actively traded stock as investors exchanged c.65m units of shares representing c.13% of total volume.
• Despite the profit taking in today’s session, we expect the market’s performance to continue to see support from the recent forms in the FX market as well as the new PFA guideline stipulating increased allocation towards equity investments.
  

CURRENCY:

• At the interbank market, the NGN shed -0.05% against the USD to close at N305.65, as the CBN maintains its daily intervention sales. The local unit however gained +0.80% and +0.01% against the GBP and EUR to settle at N397.57 and N351.66 respectively.
• In the parallel market, the Naira closed flat at N367/$, however shed -1% each against the GBP and EUR to end today’s session at N467 and N407 respectively.
• We expect NGN performance to continue to see support from FX sales by the CBN and improved liquidity at the IEFX window.

 FIXED INCOME:

• System liquidity ended today’s session at c.N25bn negative, as such both the O/N and OBB rose to 126% and 116% levels from 18% and 17% levels on Friday respectively.  While the 1month and 3month NIBOR rates increased by 18bps and 17bps, the 6month NIBOR rate declined by 3bps to berth at 24.47%.
• As part of efforts to keep system liquidity under control, the apex today sold c.N5.3bn worth of OMO bills with stop rate quoted at a range of 18-18.6%.
• Given lack of inflow from OMO maturity, we expect money market rates to remain elevated during the week.
• In response to limited system liquidity, the bond market opened the week on a bearish note. Hence, yields inched up slightly on most of the tenors. While yields on the 7r and 10yr benchmark bonds were up by 6bps and 2bps to settle at 15.94% and 16.07% respectively, yield on the 5yr benchmark bond closed flat at 16.02%.
• We expect activity in subsequent session to be influenced by liquidity levels.
  

Below are key NSE statistics as at the end of trades: