June 14, 2017/Cordros Research

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EQUITIES

• Nigerian equities rebounded, with the All Share Index (+1.38%) eroding the 0.41% loss (Monday: -0.12% and Tuesday: -0.28%) posted thus far this week. Today’s bullish performance was supported by renewed interest across major sectors, speaking further to the fact that the market’s lingering rally’s major life battery (developments in the FX market) remains strong enough to keep sentiments upbeat.

• Following today’s proceedings, the Month-to-Date and Year-to-Date gains increased to 13.90% and 25.02% respectively.

• Demand was most notable for banking stocks, particularly ZENITHBANK (+4.99%) and GUARANTY (+4.98%), bolstering the Banking index by 2.92%. The Insurance (+1.55%), Oil & Gas (+1.28%), Consumer Goods (+1.03%), and Industrial Goods (+0.83%) indices equally benefitted from price appreciations in WAPIC (+4.00%), AIICO (+1.89%), OANDO (+8.13%), SEPLAT (+1.20%), UNILEVER (+10.00%), FLOURMILL (+3.70%), CCNN (+4.64%), and WAPCO (+1.83%) respectively.

• Market breadth remained positive with 36 gainers versus 22 losers, compared to 30 gainers against 28 losers yesterday. Total volume traded increased significantly by 85.03%, to 759.05 million shares, valued at N6.30 billion, and exchanged in 7,357 deals.

• We expect the ongoing rally to be sustained in the coming session.

CURRENCY

• At the time of writing, the naira – in the interbank market – had depreciated against the three currencies we track – USD/NGN (-0.02% to N305.70), GBP/NGN (-0.37% to N411.01), and EUR/NGN (-0.60% to N362.02). In the parallel market, the LCY strengthened 0.97% against the EUR to N407.00 while it was flat against the USD and GBP at N370.00 and N465.00 respectively.

FIXED INCOME AND MONEY MARKET

• The overnight money market rate declined further, this time by 959 bps to 17.33%, from yesterday’s 26.92%, following lingering expectation of considerable inflow (worth N205.94 billion) via maturing OMO bills tomorrow.

• Investors remained upbeat in the treasury bills market, with average yield dropping 20 bps to 18.49%. Demand occurred across all ends of the curve, most sizeable at the short (-63 bps), followed by the mid (-6 bps), and modest at the long (-2 bps) segment. Noteworthy, the 8DTM bill was in high demand, with yield consequently declining by 539 bps to 15.43%. The result of today’s NTB auction was unavailable at the time of writing.

• Similar to yesterday’s trend, albeit at a tapered rate, the bond space was equally bullish, with modest demand at the short (-1 bp) and long (-4 bps) ends of the curve causing average yield to contract 2 bps – closing at 16.72%. Yields at the intermediate segment recorded an uptick of less than a basis point.