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NSE Starts Week on Negative Note, as Investors Sold off Oil & Gas Stocks

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L – R: Shows Bonaventure Onwuji, Listing Compliance Manager, NSE; Godstime Iwenekhai, Acting Head, Listings Regulation Department, NSE; Tinuade Awe, General Counsel, Head of Regulation, NSE; Agnes Lutukai, Head of Department, Professional Practice, West Africa KPMG Professional Service; Chineme Nwigbo, Senior Manager, Department of Professional Practice, West Africa KPMG Professional Services; Williams Erimona, Senior Manager, Department of Professional Practice, West Africa KPMG Professional Services at Regulatory and Statutory Disclosure Training at the Exchange on Thursday

September 18, 2017/Cordros Research

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EQUITIES

  • The equities market started the week on a negative note, as the ASI depreciated by 0.38% to 34,873.07 point – closing below the 35,000 mark,as investors sold offoil and gas stocks.
  • Today’s performance extended the Month-to-Date loss to 1.78% and moderated the Year-to-Date return to 29.76%.
  • The Oil and Gas (-3.01%) index recorded the largest loss, following sell off in the shares of SEPLAT (-5.00%), and OANDO (-4.96%). The Consumer Goods (-1.17%), and Industrial Goods (-0.77%) indices also recorded negative returns, as investors took profit in NB (-2.86%) and WAPCO (-1.94%) shares respectively.  On the flip side, the Banking (+0.88%) and Insurance (+0.23%) indices closed positive, driven by interests in STANBIC (+0.77%) and NEM (+2.52%) shares, respectively.
  • Market breadth remained negative with 18 losers and 14 gainers, led by NEIMETH (-8.57%) and AIRSERVICE (+4.92%). Total volume of trade increased by 1.62% to 162 million units, valued at N1.54 billion, and exchanged in 3,225 deals. Notable crossings in today’s session include 15.6m units of ACCESS, 1.8 million units of WAPCO, and 2 million units of STANBIC at N10.25, N49.00, and N39.50, respectively.
  • We expect the market to close negative in tomorrow’s trading session, as investors take profit in value stocks.

CURRENCY

  • At the time of writing, the CBN USD/NGN spot strengthened by 0.02% to N305.95. Similarly, in the interbank, the NGN strengthened against the Bloomberg’s referenced GBP (+1.73%) and EUR (+1.43%) to N481.50 and N424.50, but was flat against the USD at N354.99. Mixed reactions played out in the parallel market, as the LCY strengthened against the EUR (+0.23%), weakened against the GBP (-1.04%), and closed flat against the USD, to N437, N485, and N369, respectively. In the I&E FX window, the FMDQ’s referenced USD/NGN (-0.16%) depreciated to N359.06.

FIXED INCOME AND MONEY MARKET

  • The overnight money market rate contracted by 75 bps to 11.42% against 12.17% on Friday, which we attribute partly to the lower subscription in today’s OMO auction, wherein the apex bank allotted N17.57 billion (vs. N60 billion offered) worth of bills – comprising N5.18 million (vs. N10 billion offered) of the 80-day and N17.56 billion (vs. 50 billion offered) of the 185-day bills, at respective stop rates of 16% and 17.95%.
  • Average yield in the treasury bills market contracted marginally by 1 bp to 17.52%. Yield contracted at the long (-5 bps) end of the curve to 17.42%, following interest in the 5-APRIL-2018(-44 bps) bill. Conversely, yield at the short (+6bps) and mid (less than 1 bp) segments expanded to 17.15% and 18.05% as investors sold off the 19-OCT-2017 (+23 bps), 21-DEC-2017 (+31 bps) bills.
  • Proceedings in the bond market were bearish across board, as average yield expanded by 1 bp to 16.33%. Yields at the short (+less than 1 bp), mid (+4 bps), and long (+less than 1 bp) ends of the curve expanded to 16.21%, 16.33%, and 16.34% respectively. Notable bonds were the 29-JUNE-2019, 13-FEB-2020(+7 bps), and 17-MARCH-2027(+9 bps) bonds respectively.

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