October 11, 2017/InvestmentOne Research

Please click to download the Market Report for Wednesday 11^th October 2017

EQUITIES:  

• Following the continued sell-off in NB (-112pts) as well as the declines in STANBIC (-27pts) and UBA (-17pts), which more than outweighed the gains in SEPLAT (+12pts) and NESTLE (+7pts), the equities market closed down -0.34% to 36,652.82pts.
• However, major sector performance was mixed as the Banking (-0.15%) and Consumer Goods (-1.08%) sectors declines while the Industrial (+0.15%) and Oil & Gas (+0.63%) sectors ended positive.
• Market breadth index, an indication of investor sentiment, closed neutral as 19 stocks gained and 19 stocks declined. VITAFOAM (-5.00%) was the worst performer while MANSARD (+10.00%) was the best performer.
• Activity levels trended south today with total volume and value down -5% and -44% respectively as investors exchanged 336m units of shares worth N1.83bn. Similar to yesterday, DIAMONDBNK was the most actively traded stock with 231m units of shares, however, ZENITHBANK led the value chart with N266m worth of shares exchanged.
• In the near term, we expect market direction to be influenced by investors positioning for the release of Q3 2017 scorecards. Nonetheless, we see the recent profit taking as an entry opportunity in our recommended names.
  

CURRENCY:

• The Naira depreciated at the IEFX window, falling by -0.26% to N474.79 against the GBP, -0.11% to N360.71 against the USD and -0.62% to N426.44 against the EUR.
• At the parallel market, the local currency remained fairly unchanged at N363 against the USD, N475 against the GBP and N425 against the EUR.
• In the near term, the NGN should continue to see support from CBN’s FX sales.
  

FIXED INCOME:

• The continued squeeze on system liquidity by CBN contributed to the spike in the Open-Buy-Back and Overnight rates to 45.50% and 48.25%, from 29.17% and 32.08% respectively. The Apex bank conducted another OMO auction today, selling N4bn worth of bills at 16.00% stop rate. As at time of wring, today’s NIBOR rates were yet to be published.
• Despite N62bn worth of OMO bills maturing tomorrow, we expect the Apex bank to sustain its aggressive squeeze on system liquidity. As a result, money market rates are likely to remain high in the coming sessions.
• Investors remained largely bullish in the bond market today with yields on the 5yr benchmark bond falling by 72bps to 15.11%. While the yield on the 7yr benchmark bond was unchanged at 14.96%, yield on the 10yr benchmark bond declined by 12bps to 15.08%.
• In the near term, we expect market activity to be influenced by liquidity levels and foreign investor participation.

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