July 31, 2017/InvestmentOne Research

Please click to download the Market Report for Monday 31^st July 2017

 EQUITIES:

• The equities market picked up where it left off in the previous session with ASI closing lower by -2.77% to berth at 35,844.00pts. The index market capitalisation also decreased by c.N352bn to close at c.N12.35trillion while YTD return shrank to +33.37%.
• This performance was largely due to decline in DANGCEM (-583.47pts), GUARANTY (-175.66pts) and ZENITHBANK (-117.92pts) which offset the gain in DANGSUGAR (+38.78pts), FBNH (+22.99pts) and OKOMUOIL (+15.61pts).
• Investor sentiment as gauged by market breadth index (-0.04x) closed negative as 23 stocks led by DANGSUGAR (+10.22%) advanced compared with 27 losers led by CCNN (-9.65%). Activity level also weakened as volume and value turnover declined by -7% and -35% respectively to  490m units of stocks worth c.N5.27bn. FCMB and FBNH were the most actively traded stocks with c.127m and c.58m units traded respectively.
• With the exception of the Oil & Gas tracker (+0.33%) which closed positive due to gain in OANDO (+2.31%), other sectoral indexes closed in the red. Industrial (-4.69%) led the laggard list followed by Banking (-3.79%) and Consumer (-0.38%) trackers..
• Given expectation of positive earnings scorecards from tier 1 banking names, we see the current downtrend, particularly in banking names, as providing an attractive entry point for discerning investors. That said, we also highlight the potential for further profit-taking given recent gain in the index.
  

CURRENCY:

• Due to CBN’s sustained intervention near the end of trading at the interbank market, the NGN continued to close at N305-306 levels against the USD. However, the local currency lost -0.30% to N413.61 against the GBP and -0.21% to N370.14 against the EUR.
• The NGN remained unchanged at the parallel market at N365 against the USD, N474 against the GBP and N424 against the EUR.
• Going forward, we expect the NGN to continue to see support from the CBN’s FX sales.

FIXED INCOME:

• CBN maintained its stance in squeezing system liquidity in defence of the local currency today close to N60bn worth of OMO bills at 17.95% and 18.55% stop rates. Consequently, the 3month and 6month NIBOR rates inched up 26bps and 7bps to 20.95% and 22.42% respectively. However, the 1month NIBOR rate fell by 118bps to 15.82%.
• While yield movement remained muted in the bond market, investors were largely bearish on average with the yields on the 5yr and 7yr benchmark bonds increased by 1bp and 3bps to 16.19% and 16.29% respectively. The yield on the 10yr benchmark bond was unchanged at 16.25% at close.   
• Despite the maturity of N85bn worth of OMO bills on Thursday, we expect CBN to maintain its stance on squeezing system liquidity in defence of the local currency.  As such we expect yields in the fixed income space to remain range bound. 
  

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