July 5, 2017/InvestmentOne Research

Please click to download the Market Report for Wednesday 5^th July 2017

EQUITIES:  

• The bearish sentiment towards Nigerian equities entered the fourth day as the All Share Index shed -0.33%, shrinking  the index YTD return to +20.20% while market capitalisation settled at c.N11.13trillion.
• Major driver of today’s decline include sell off in Consumer names such as UNILEVER (-20.26pts) and FLOURMILL (-19.03pts) as well as Tier 2 Banking names ETI (-27.78pts) which neutralised the gains in UBA (+19.04pts) and FBNH (+14.63pts) and NB (+6.92pts).
• Market turnover however strengthened with volume and value traded up 51% and 75% to 311m units of stocks worth c.N2.97bn in 4,312 deals.

§  UNITYBANK (+9.84%) topped the list of 12 advancers as against 33 losers topped by FLOURMILL (-9.72%).  As such, market breadth index (-0.22x) closed negative.

• The Industrial tracker was the lone gainer with a +0.02% increase while Consumer  (-0.89%), Banking (-0.34%) and Oil & Gas (-0.20%) closed in the red.
• In the near term, we see the current downtrend in the index as creating attractive entry points for investors to build position in quality names over a medium to long term horizon.
  

CURRENCY:

• As CBN maintained its intervention at the close of trading at the interbank market, the NGN continued to close flat at N305-306 levels against the USD. The NGN also gained +0.08% to N406.44 against the the GBP and +0.09% to N356.49 against the EUR.
• At the parallel market the NGN remained flat at N365 against the USD while it gained +0.43% to N468 against the GBP and depreciated by -0.50% to N412 against the EUR. The NGN also depreciated by -0.45% to N365 against the USD at the IEFX window.

§  Going forward, we expect the local currency to continue to see support from the CBN’s intervention sales, with the Apex bank offering $100m in forwards to the market yesterday.

FIXED INCOME:

• Despite the absence of an OMO auction today, the Open-Buy-Back and Overnight rates surged to 78.33% and 80.58%, from 44.16% and 50.91% respectively, as system liquidity fell by N70bn to c.-N80bn. As at time of writing, NIBOR rates were yet to be published.
• CBN held a T-bill auction today, selling N177bn worth of 91-day, 182-day and 364-day bills at 13.50%, 17.50% and 18.60% stop rates. We highlight that the stop rate on the 364-day bill was 5bps lower than the last auction on the 22nd of June 2017.
• While activity levels remained uninspiring in the bond market today, investors were largely bearish today with yield on the 10yr benchmark bond increasing by 4bps to 16.19%. With this said the yield on the 5yr and the 7yr benchmark bonds remained unchanged at 16.10% and 15.88% respectively.
• Going forward, N65bn worth of OMO bills will be maturing on tomorrow, however we expect CBN to keep system liquidity tight in defence of the local currency. As such we expect money market rates to remain high and yields in the fixed income space to remain at current levels in the absence of offshore demands.
  

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