August 17, 2017/InvestmentOne Research

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EQUITIES:  

• The equities market closed positive today, following three consecutive trading sessions in which the NSE-ASI ended negative. However with this said, the market breadth index, a gauge for investor sentiment, closed negative.
• Following the gains in DANGCEM (+288pts) and ZENITHBANK (+46pts), which more than offset the declines in NB (-23pts) and NESTLE (-23pts), the ASI gained +0.59% to close at 36,316.58pts.
• Major sector performance was mixed today, with the Oil & Gas (-1.17%) and Consumer Goods (-0.42%) closing negative while the Industrial (+0.85%) and Banking (+0.06%) sectors ended in the green.
• MORISON (-8.16%) was the market’s worst performer of the 28 stocks that declined, against FIDSON (+5.00%) which led the 15 stocks that gained.
• While total volume remained relatively flat, total value increased by +8% as investors exchanged 225m units of shares worth N5.48bn. CUSTODYINS (+1.33%) was the most actively traded stock with 30.3m units of shares accounting  for 13.5% of total volume.
• Though the All Share Index closed positive today, market sentiment appears largely bearish as suggested by the market breadth index, which printed negative for the fourth trading days. In subsequent sessions, while we expect the market to stabilize given the downtrend in the first three sessions of the week, we highlight that further profit-taking seems likely given seeming lack of positive news flow as Q2 2017 earnings season comes to an end.

CURRENCY:

• The NGN weakened  by -0.41% against the USD to close at N361.17  at the IEFX window. It however recorded  +0.02% and +0.05% gains against the GBP and EUR to berth at N466.45 and N424.81% respectively.
• At the parallel market, the Naira strengthened by 0.54% to the USD to close at N368.It however closed relatively flat against the GBP and EUR to berth at N478 and N432 respectively.
• In subsequent sessions, we expect the NGN to see support from FX sales by the apex bank.
  

FIXED INCOME:

• Despite sales of  OMO bills worth c.N98bn by the apex bank  today,  inflow from OMO maturity  of c.N168bn led to contraction in money market rates.. The O/N and OBB berthed at 14.88% and 14.33% as against the 20% and 22% levels in the previous session.
• We expect upward bias on rates in subsequent session as CBN maintains its stance in squeezing system liquidity through sales of OMO bills.
• In the bond market, yields movement was largely mixed  today.  At the long-end of the curve , improved demand to decline in yields on MAR2036 and MAR2037. On the flip side, yields closed flat or marginally up in other tenors. While yields on the 5yr and 7yr benchmark bonds inched up by 3bps and 2bps to 16.38% and 16.35% respectively, yield on the 10yr benchmark closed flat at 16.46%.
• We expect activity in subsequent sessions to be influenced by liquidity levels.

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