June 13, 2017/Cordros Research

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EQUITIES

• The market closed lower, following profit-taking across major sectors. The All Share Index shed 0.28%, closing at 33,141.85 points.

• Today’s performance reduced the Month-to-Date and Year-to-Date gains to 12.35% and 23.32%.

• The Industrial Goods (-0.09%), Consumer Goods (-0.56%), Oil and Gas (-2.05%), Banking (-0.58%) and Insurance (-0.09%) indices all closed lower, as investors liquidated their holdings in DANGCEM (-0.15%), NESTLE (-2.6%), SEPLAT (-1.37%), ACCESS (-3.72%) and CUSTODYINS (-4.36%) respectively.

• Market breadth was positive with 30 gainers versus 28 losers. Total volume traded decreased by 18.13%, to 410.22 million shares, valued at N5.55 billion, and exchanged in 6,167 deals.

• We expect gains to resurface on the bourse tomorrow, following two straight days of sell-offs and today’s positive market breadth — which speaks to continued buying interest.

CURRENCY

• It was disclosed that the apex bank sold USD413.5 million, comprising USD100 million to dealers in the wholesale window, USD28 million at the SMEs window, and USD25.5 million to the invisibles segment. The bank also released the figures for the auction sales in the retail window last week, totaling USD260 million. That said, in the interbank market, the naira had, at the time of writing, strengthened against two of the currencies we track. The GBP/NGN (+0.18%) and EUR/NGN (+0.68%) strengthened to N409.77 and N360.90 respectively, while the USD/NGN (-0.02%) weakened to N305.65. In the parallel market, the GBP/NGN (+0.43%) strengthened to N465 while the USD/NGN (-0.82%) and EUR/NGN (-0.98%) weakened to N370 and N411 respectively. Meanwhile, the USD/NGN (+0.45%) strengthened to N373.25 in the IEFX market.

FIXED INCOME AND MONEY MARKET

• The overnight money market rate contracted significantly by 99.75 percentage points to 26.92%, despite today’s OMO auctions — wherein the apex bank sold a total sum of N2.13 billion worth of bills, comprising N324.00 million (vs. N5.00 billion offered) and N1.80 billion (vs. 10 billion offered) of the 184-day and 352-day bills respectively. Today’s movement in the overnight rate is attributable to expectation of notable inflow (worth N205.94 billion) via maturing OMO bills on Thursday.

• Investors were upbeat in the treasury bills market, ahead of tomorrow’s auction, with demand at the short (-23 bps) and mid (-5 bps) ends of the curve causing average yield to contract by 8 bps to 18.69%. With investors particularly interested in short and mid dated bills, the 37DTM (-118 bps to 17.33%) attracted the most interest, closely trailed by the 30DTM (-114 bps to 17.65%). On the flipside, snippets of selloff ensued at the long end of the curve, wherein yields recorded a marginal increase of 1 bp. Tomorrow, the central bank, at its NTB auction, will offer N39.01 billion, N23.02 billion, and N174.64 billion (14.6% higher than maturing amount) of the 91, 182, and 364-day bills respectively.

• The bond market also closed on a bullish note, with average yield declining by 13 bps to 16.74%, following demand at the short (-43 bps) segment of the curve. Investors sold off at the intermediate and long ends, respectively, causing yields to rise 1 bp and 3 bps. Yesterday, the DMO released its bond offer circular for the month of June, announcing that it plans to offer (on June 21, 2017) N140 billion, comprising N40 billion of the FGN JUL 2021 bond, and N50 billion apiece of the FGN MAR 2027 and FGN APR 2037 bonds respectively – all in re-opening.