September 26, 2017/InvestmentOne Research

Please click to download the Market Report for Tuesday 26^th September 2017

EQUITIES:  

• For the second consecutive trading session, the equities market closed in the red, driven by the sell-off in bellwether stocks; DANGCEM (-345pts), NESTLE (-45pts) and NB (-23pts). These performances more than offset the gains in Banking names; ZENITHBANK (+9pts) and GUARANTY (+9pts).
• Consequently, the NSE-ASI ended down -1.15% to 34,951.27pts, representing a market capitalisation of N13.19tr.
• Furthermore, market breadth index closed in the red as 16 stocks advanced compared with 19 stocks that declined. NEIMETH (+4.84%) led the gainers’ chart while INTBREW (-4.98%) was the worst performer.
• Major sector performance was mixed as the Industrial (-1.68%) and Consumer Goods (-0.88%) sectors declined while the Banking (+0.10%) and Oil & Gas (+0.42%) closed positive.
• Turnover improved today as investors exchanged 500m units of shares worth N3.62bn, representing a +367% and +165% surged in total volume and value respectively, compared to yesterday’s session. GUARANTY (+0.25%) topped the value chart with N620m worth of stocks traded, however CONTINSURE (-4.46%) was the most actively traded stock with c.191m units of shares traded.
• With this said, while the ASI has traded sideways in the past few weeks, we believe the direction going forward may be influenced by investors positioning ahead of Q3 2017 earnings season. Nonetheless, 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 gained +2.52% to N472.66 against the GBP and +2.87% to N414.27 against the EUR. With this said, the NGN closed fairly unchanged at N360.05 against the USD.
• While the NGN was stable at N366 against the USD and N492 against the GBP, it appreciated by +0.92% to N436 against the EUR at the parallel market.
• Going forward, we expect the local currency to continue to see support from CBN’s FX sales, with the Apex bank auctioning USD195m to the market on Monday.
  

FIXED INCOME:

• CBN continued its OMO auctions today selling N4bn worth of bills at 17.945% stop rate. However, the 1month NIBOR rate shed 34 bps to 18.49%, while the 3month and 6month NIBOR rates were relatively unchanged at 21.12% and 22.70% respectively. 
• At the conclusion of the Monetary Policy Committee meeting today, the benchmark interest rate was left unchanged at 14%.
• Investors were largely bullish in the bond market today, with focus on long dated maturities as the yield on the July 2034 fell by 43bps to 15.92%. Yields on the 7yr and 10yr benchmark bonds were down 27bps and 11bps to 16.04% and 15.91% respectively. Yield on the 5yr benchmark bond was unchanged at 15.88%.
• The DMO will be auctioning N135bn worth of 5yr, 10yr and 20yr bonds tomorrow, which may be priced slightly lower than the August auction given the moderation in bond yields at the secondary market in recent weeks.
• The outcome of the bond auction is likely to influence market activity towards the end of the week.

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