September 27, 2017/InvestmentOne Research

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EQUITIES:  

• The equities market closed positive today, largely due to the gains in DANGCEM (+197pts), which pushed the ASI up +0.44% to 35,103.40pts.
• In addition to DANGCEM, today’s performance was influenced by the gains in ZENITHBANK (+35pts) and NESTLE (+11pts), which more than offset the sell-off in NB (-34pts), GUARANTY (-34pts) and UBA (-15pts).
• However, all major sectors with the exception of Industrial (+0.79%) ended negative. The Oil & Gas (-0.33%) was the worst performer while the Consumer Goods and Banking sectors declined by -0.21% and -0.19% respectively.
• Also market activity decreased as investors exchanged 136m units of shares worth N1.27bn, representing a -73% and -65% slide in total volume and value respectively, compared to yesterday’s session. JAIZBANK (+4.29%) was the most actively traded stock with c.36m units of stocks while NESTLE (+0.39%) topped the value chart with N201m worth of stocks traded.
• Market breadth index ended in the green (+0.01x) as 24 stocks closed positive, compared with 23 stocks that ended negative. CHAMPION (8.14%) was the best performer against MORISON (-8.33%), which led the losers’ chart.
• 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 local currency continued to close at N360 levels against the USD. However, it depreciated by -1.96% to N482.11 against the GBP and -1.93% to N422.42 against the EUR.
• The NGN appreciated by +1.20% to N486 against the GBP and +1.90% to N428 against the EUR at the parallel market while it remained fairly unchanged at N365 against the USD.
• Going forward, we expect the NGN to continue to see support from the CBN’s FX sales on the back of rising oil production and prices.
  

FIXED INCOME:

• The Overnight and Open-Buy-Back rates declined by 250bps and 167bps to 24.75% and 23.33% respectively, which may not be unrelated to the absence of an OMO auction by CBN today and anticipation of the N123bn OMO maturity tomorrow.
• As at time of writing, today’s NIBOR rates were yet to be released.
• Activity at the bond market was muted today, which may not be unconnected with investors focusing on today’s bond auction. Consequently, the yields on the 5yr, 7yr and 10yr benchmark bonds were unchanged at 15.88%, 16.04% and 15.91% respectively.
• As at time of writing, the results of the bond auction were yet to be released.
• In the near term, we believe activity in the bond market may likely be influenced by the outcome of the DMO’s N135bn bond auction today.

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