September 14, 2017/InvestmentOne Research

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EQUITIES:  

• The equities market closed positive for the second consecutive trading session today, following the gains in DANGCEM (+246pts), NESTLE (+34pts), NB (+11pts), which more than offset the declines in ZENITHBANK (-50pts) and UNILEVER (-24pts).
• Consequently, the ASI gained +0.55% to end at 35,660.04pts representing a market capitalisation of N12.29tr.
• However, major sector performance was mixed with the Industrial (+1.08%) and Consumer Goods (+0.18%) positive while the Banking (-0.63%) and Oil & Gas (-1.02%) ended in the red.
• Market activity improved today as investors exchanged 128m units of shares worth N2.73bn, a +7% increase in total volume while total value spiked by +56%. Banking sector dominated activity with ZENITHBANK (-2.42%) the most actively traded stock with c.20m units of shares exchanged while GUARANTY (-0.16%) topped the value chart with N724m worth of stocks traded.
• Despite the positive close to the ASI, market breadth index continued to close negative (-0.06x) with 22 stocks declining against 16 stocks that gained. OKOMUOIL (+5.74%) was the best performer against NEIMETH (-8.43%), which topped the losers’ chart.
• In the near term, we expect the ASI to continue to trade sideways in the absence of a positive catalyst to drive market momentum. Nonetheless, we see the recent    sell-off as an entry opportunity in our recommended quality names.
  

CURRENCY:

• The NGN strengthened by +1.70% to N467.29 against the GBP and +2.90% to N415.65 against the EUR while it shed -0.08% to N360.50 against the USD at the IEFX window.
• At the parallel market, the NGN depreciated across major currencies, shedding -0.54% to N369 against the USD, -0.42% to N478 against the GBP and -0.23% to N437 against the EUR.
• Despite the local currency depreciating in the WTD, we believe CBN’s FX intervention sales on the back of rising oil production and prices should continue to support the NGN.
  

FIXED INCOME:

• Following the N160bn OMO maturity, which more than outweighed the c.N12bn OMO auction by CBN today, the 1month and 6month NIBOR rates declined by 77bps and 15bps to 17.90% and 22.72% respectively while the 3month NIBOR rate was relatively flat at 20.59%.
• Investors were largely bullish in the bond market today as yields contracted across the curve. The decline in yield was most noticeable on the March 2036, down 26bps to 16.28%. We believe the downward movement in yields may not be unconnected with the improvement in system liquidity following the OMO maturity and the lower rates at the recent T-bill auction. Yield on the 5yr benchmark bond was unchanged at 16.28% while the yield on the 7yr and 10yr benchmark bonds fell by 8bps and 12bps to 16.39% and 16.47% respectively.
• Going forward, we expect market activity to be influenced by liquidity levels.

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