August 29, 2017/InvestmentOne Research

Please click to download the Market Report for Tuesday 29^th August 2017

 EQUITIES:  

• For the second consecutive trading sessions, the Nigerian equities market closed in the red, falling by -0.42% to 36,165.93pts.
• Today’s performance was largely driven by the sell-off in bellwether stocks; DANGCEM (-115pts) and NB (-32pts), which more than offset the gains in GUARANTY (+26pts) and STANBIC (+15pts).
• Investor interest in STANBIC may not be unconnected with the bank announcing an interim dividend of 60kobo per share, following the release of its Q2 2017 results.
• Furthermore, all major sectors, with the exception of Banking (+0.27%), closed in the red.  The Industrial (-0.53%) was the worst performer, followed by Oil & Gas (-0.45%) and Consumer Goods (-0.38%).
• Similar to yesterday, market breadth index closed negative as 26 stocks declined compared with 14 stocks that gained. JAIZBANK (-5.00%) was the market’s worst performer while CHAMPION (+6.84%) led the gainers’ chart.
• Market activity declined significantly today as investors exchanged 144m units of shares worth N1.5bn, a -59% and -49% decline in total volume and value respectively, compared to yesterday’s session. FIDELITYBK was the most actively traded stock with 23m units of shares although ZENITHBANK led the market in regards to total value with N416m worth of shares traded.
• Going forward, we expect the market to be volatile as Q2 2017 earnings season comes to an end. However, we see the recent sell-off as an entry opportunity in our recommended quality names.

CURRENCY:

• The local currency closed flat at N359.67 against the USD at the IEFX window today. However, it gained +0.33% to N464.73 against the GBP but shed -0.10% to N431.67 against the EUR.
• While the NGN appreciated by +0.54% to N368 against the USD and +0.60% to N475 against the GBP, it remained relatively unchanged at N434 against the EUR at the parallel market.
• In the near term, we believe the local currency should continue to see support from the CBN’s FX sales, with the Apex bank selling $250m on Monday.
  

FIXED INCOME:

• Money market rates declined across all tenors today as system liquidity improved to c.-N80bn, from c.-N110bn yesterday. The decrease in rates was more noticeable on the 3month NIBOR rate, down 43bps to 22.49%. The 6month NIBOR rate was down 16bps to 23.72% while the 1month NIBOR rate fell by 16bps to 23.72%. With this said, CBN sold N50bn worth of OMO bills at 17.55% stop rate today. This is likely to pressure system liquidity and money market rates going forward.
• The Apex bank will be conducting a T-bill auction tomorrow, offering N193bn worth of 91-day, 182-day and 364-day bills. We expect the stop rates at the auction to be relatively flat compared to the last auction a fortnight ago when the 91-day, 182-day and 364-day bills were sold at 13.35%, 17.35% and 18.55% stop rates, as system liquidity remains thin.
• Despite CBN’s continued squeeze on system liquidity constraining market activities, investors were largely bullish in the bond market today. This was more prominent on bonds at the short end of the curve with the yield on the June 2019 and Feb 2020 down 5bps and 6bps to 16.75% and 16.77% respectively. Yields on the 5yr, 7yr and 10yr benchmark bonds remained unchanged at 16.37%, 16.57% and 16.76% respectively.
• Going forward, we expect market activity to be influenced by liquidity levels.

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

Please click to download the Market Report for Tuesday 29^th August 2017