October 19, 2017/InvestmentOne Research

Please click to download the Market Report for Thursday 19^th October 2017

EQUITIES:  

• The equities market marginally gained +0.01% to close at 36,645.65pts after two consecutive days of negative close.
• Performance was bolstered on the back of the gains in STANBIC (+32pts), INTBREW (+21pt), and UBN (+7pts), which slightly neutralized the sell-off in UBA (-22pts), NB (-12pts) and FO (-8pts).
• Market breadth index closed negative (-0.01x) as 19 stocks gained compared to 20 stocks that recorded loses. CUTIX (+7.73%) was the best performer while MANSARD (-4.84%) topped the losers’ chart.
• While Banking (-0.33%) and Oil & Gas (-0.48%) closed in the red, the Consumer Goods (+0.18%) and Industrial (+0.01%) inched up marginally.
• Total volume and value recorded today were c.141m units of shares worth N1.74bn. This represents a -29% and -41% decline in volume and value respectively.
• With more results underway, we expect investors’ reaction to earnings scorecard to shape market direction in the near term. Nonetheless, we see the recent profit taking as an entry opportunity in our recommended names.
  

CURRENCY:

• The NGN depreciated (-0.01%) against USD to maintain its flattish tow (N360.30) at the I&E FX window. Contrarily, it appreciated by +0.31% to N473.44 against the GBP while it depreciated -0.15% to N425.11 against the EUR.
• The parallel market segment saw appreciation in the NGN against the USD  to close at N363, 0.27% higher than yesterday close, while against the GBP and EUR it closed flat at 475 and N425 respectively.
• In the near term, we reiterate our views that CBN’s continued intervention sales will be supportive of the local currency.

FIXED INCOME:

§  The O/N and OBB closed higher (+42bps to 23.33%) and (+83bps to 21.67%) respectively. This was largely due to CBN’s OMO issuance of N98.9bn to offset excess liquidity arising from OMO maturities worth N76bn which hit the system today. Instructively, due to CBN’s quest to curb currency speculation on the Naira, we expect the monetary authority to keep a tight lid on system liquidity and sustain its incessant OMO issuances.

§  At the OMO auction today, CBN sold N1.2bn worth of 91-day, N97.7bn worth of 196-day at 16.00%, and 17.81% stop rates respectively.

§  In the bond market today, investors sustained their buying interest on the longer dated maturities to lock in current position against further plunge in yields. The downtrend in yield was most noticeable on the July 2030, down 8bps to 14.83%. While the yield on the 5yr, 7yr and 10yr benchmark bond were flat at 14.89%, 15.00% and 14.82% respectively.

§  Going forward, we expect that market activity will be shaped by liquidity levels and foreign investor participation.  

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