June 20, 2017/Cordros Research

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EQUITIES

• Nigerian equities extended gains, as demand for industrial and consumer goods stocks persisted, with the All Share Index appreciating 0.71% to 34,375.60 points.

• Following today’s performance, the Month-to-Date and Year-to-Date gains increased to 16.53% and 27.91%.

• The Industrial Goods (+1.26%) and Consumer Goods (+1.06%) indices remained resilient, supported by gains recorded by DANGCEM (+1.89%), WAPCO (+0.37%), NB (+1.82%), and NESTLE (+0.33%) respectively. Conversely, the Oil & Gas (-1.22%), Insurance (-0.98%), and Banking (-0.68%) indices closed lower, driven by price declines in FO (-5.25%), OANDO (-4.61%), MANSARD (-4.58%), LINKASSURE (-3.64%), FBNH (+1.83%), and UBA (+1.14%) respectively.

• Market breadth turned negative, with 25 gainers versus 27 losers, compared to 28 gainers against 19 losers yesterday. Total volume traded decreased further by 18.70%, to 392.27 million shares, valued at N4.22 billion, and exchanged in 5,412 deals.

• We expect gains to persist in the coming session.

CURRENCY

• Yesterday, the apex bank injected USD195 million – comprising USD100 million (via the wholesale window), USD50 million (through the SMEs window), and USD45 million (for invisibles) — into the FX market. Meanwhile, at the time of writing, the naira – in the interbank market – had appreciated by 0.94% and 0.30% against the GBP and EUR to N397.34 and N350.19 respectively, while it traded flat against the USD at N305.80. In the parallel market, the EUR/NGN (+0.30% to N410.00) strengthened while the GBP/NGN (-0.43% to N467.00) weakened, with the USD/NGN trading flat at N368.00. The LCY appreciated 1.24% to N361.67 in the I&E FX window.

FIXED INCOME AND MONEY MARKET

• The overnight money market rate contracted 19 percentage points to 34.50%, from yesterday’s 53.33%, following expected improvement in system liquidity, on the back of N152.61 billion maturing OMO bills hitting the system on Thursday. Indeed, that overshadowed today’s withdrawal via OMO auction, wherein the apex bank sold a total sum of N11.32 billion, comprising N1.32 billion (vs. offered N5.00) and N10.00 billion (the same amount offered) of the 170-day and 345-day bills respectively.

• The bulls resurfaced in the treasury bills market, with average declining 7 bps to close at 18.24%. Demand occurred across all ends of the curve, most notable at the short (-11 bps), followed by the mid (-8 bps) and the long (-5 bps) segments. Particularly, the 65DTM (-88 bps to 17.50%) bill recorded the largest contraction. At tomorrow’s NTB auction, the central bank will offer N133.25 billion, comprising N28.12 billion, N55.12 billion, and N50.00 billion of the 91, 182, and 364-day bills respectively to investors.

• The bond space remained pressured, with broad based selloff causing average yield to increase 17 bps to 16.67%. Specifically, yields expanded by 45 bps, 10 bps, and 3 bps – respectively – at the short, intermediate, and long ends of the curve. Tomorrow, the DMO will offer 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 – all in re-opening.