August 10, 2017/InvestmentOne Research

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EQUITIES:

• The bullish run on the Nigerian bourse came to an abrupt end today as the All Share Index declined by -0.11% due largely to profit-taking on recent gains in Tier 1 banking names as well as some Oil & Gas names.
• Specifically, sell-off in ZENITHBANK (-45.71pts), GUARANTY (-40.27pts) and DANGSUGAR (-24.11pts) drove the decline in the index offsetting gains in STANBIC (+43.67pts), NESTLE (+36.95pts) and UNILEVER (+22.58pts).
• Investor sentiment, as gauged by the market breadth index (-0.07x) also closed negative as 27 stocks closed lower compared to 20 that gained points. UNILEVER (+5.00%) led the gainers’ chart while FO (-9.71%) topped the laggard list.
• Market turnover was mixed as volume traded rose by +10% to over 362m units of stocks while value turnover declined by -8% to c.N5.6bn.  ACCESS was the most actively traded stocks with c.69m units of stocks while ZENITHBANK led the value chart with trades worth c.N1.4bn.
• Oil & Gas tracker (-2.33%) closed in the red following sell-off on OANDO (-5.00%) and FO (-9.71%) while Banking  tracker (-0.99%) declined on account of marginal losses in GUARANTY (-1.16%) and ZENITHBANK (-2.04%). On the flip side, Consumer (+0.41%) closed positive due to gain in UNILEVER (+5.00%) and NESTLE (+1.33%) while the Industrial tracker closed flat.
• In subsequent sessions, we see support to ASI performance from buying interest in Tier 1 banking names as investors await the release of Q2 2017 earnings scorecards from these corporates.
  

CURRENCY:

• At the IEFX window, the NGN firmed by +0.14% and +0.74% against the USD and GBP to settle at N366.50 and N474.09 respectively. The local unit however depreciated by -6.88% against the EUR to close at N428.01..
• In the parallel market, the local unit shed -0.55% and -0.42% to close at N367 and N477 against the USD and GBP respectively while closing flat against the EUR at N430.
• Going forward, we expect the local currency to continue to see support from the CBN’s FX sales.

FIXED INCOME:

• Money market rates eased across tenors at the end of today’s session due to support from matured OMO bills of c.N113b which hit the system. The Overnight and Open-Buy-Back rates berthed at 52.21% and 46.67% from over 105% and 107% levels respectively yesterday.
• The CBN sold 184-day and 384-day OMO bills worth c.N481.1m  and c.N16.3bn at stop rates of 17.95% and 18.55% respectively in its continued bid to drain excess system liquidity in defence of the local currency.
• Despite improvement in system liquidity from OMO maturity, the bearish trend in the bond market persists as yield closed flat on most of the tenors. However, yields on the 5yr and 7yr benchmark bonds expanded by 18bps and 5bps to 16.36% and16.35% respectively while yield on the 10yr benchmark bond closed flat at 16.53%.
• We expect activity in subsequent sessions to be influenced by liquidity levels.
  

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