September 20, 2017/InvestmentOne Research

Please click to download the Market Report for Wednesday 20^th September 2017

EQUITIES:  

• Following the gains in DANGCEM (+374pts), the equities market halted a three session losing streak to close up +1.04% to 35,207.89pts.
• The gains in DANGCEM, as well as GUARANTY (+14pts), which more than offset the sell-off in UBA (-26pts), UBN (-24pts) and STANBIC (-15pts), drove today’s positive close.
• Nonetheless, market breadth index ended negative (-0.01x) as 20 stocks declined compared with 19 stocks that gained. NPFMCRFBK (-5.17%) was the worst performer while MAYBAKER (+4.92%) led the stocks that advanced.
• Furthermore, activity levels declined with total volume and value down -21% and -60% respectively, compared to yesterday’s session, as investors exchanged 137m units of shares worth just N1.13bn. MEYER was the most actively traded stock with c.20m units of shares, however, NESTLE (-0.32%) led the value chart with N201m worth of shares exchanged.
• Major sector performance was mixed with the Banking (-0.25%) and Consumer Goods (-0.04%) closing in the red, while the Industrial (+2.33%) and Oil & Gas (+1.53%) sectors ended in the green.
• Given the absence of a positive catalyst to sustain a momentum, we expect the equities market to remain volatile in the near term. With this said, we are of the view that the recent sell-off represents an entry opportunity in our recommended quality names.
  

CURRENCY:

• At the IEFX window, the NGN depreciated across major currencies, falling by -0.83% to N487.36 against the GBP, -0.12% to N360.67 against the USD and -0.45% to N430.76 against the EUR.
• While the NGN depreciated by -1.00% to N490 against the GBP, it remained fairly unchanged at N367 against the USD and N436 against the EUR at the parallel market.
• In the near term, we believe CBN’s sustained intervention should be supportive of the local currency.
  

FIXED INCOME:

• The Open-Buy-Back and Overnight rates inched up +50bps and +58bps to 10.00% and 10.92% respectively, as CBN’s OMO sales over the last two trading sessions squeezed liquidity levels. As at time of writing, today’s NIBOR rates were yet to be published.
• The Apex bank conducted a N140bn T-bill auction today, selling N22.8bn worth of 91-day bills at 13.15%, N24.7bn worth of 182-day bills at 16.80% and N168.4bn worth of 364-day bills at 17.00% stop rates. We highlight that these stop rates were 10-75bps less than last week’s auction.
• Despite the absence of an OMO auction, activities in the bond market was fairly muted, which may not be unconnected with CBN’s T-bill auction today. With this said, investors were bullish on the 5yr and 10yr benchmark bonds with the yields down 12bps and 8bps to 16.01% and 16.35% respectively. Yield on the 7yr benchmark bond was flat at 16.31%.
• Going forward, we expect market activity to be influenced by liquidity levels with N140bn worth of OMO bills will mature tomorrow.

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