October 25, 2017/InvestmentOne Research

Please click to download the Market Report for Wednesday 25^th October 2017

EQUITIES:  

·         The Nigerian bourse sustained its uptrend  by +0.25%.

·         The ASI was lifted by bargain hunting in the shares of FIDSON (+9.82%), CILEASING (+7.60%), and HONYFLOUR (+7.03%), which neutered sell-off in CUTIX (-9.36%), FO (-4.99%) and UPL (-4.95%) to close at 36,622.85pts.

·         Market breadth index closed positive (+0.12x) as 23 stocks gained compared to 12 stocks that recorded losses. FIDSON (+9.82%) was the best performer while CUTIX (-9.36%) topped the losers’ chart.

·         Banking (+0.68) and Consumer Goods (+0.05%) sectors gained, while Industrial (-0.03%) and Insurance (-1.16%) sectors closed the day in red.

·         Investors exchanged c.332m units of shares worth N4.6bn. This represents a 67.04% and 161.26% improvement in trade volume and value respectively.

      With more results on the way, we expect investors’ sentiments to be shaped by company’s earnings and expectations. Nonetheless, we remain optimistic on our recommended names and advice entry into them. 

CURRENCY:

• At the I&E FX window, the NGN closed flat against the USD at N360.38. Naira lost 1.40% and 0.76% against the GBP and EUR to close at N477.22 and N425 respectively.
• At the parallel market the NGN remained flat against the USD and GBP at N363 and N475 respectively, while it lost -0.24% against the EUR.
• 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 lower (-1908bps to 101.00%) and (-1667bps to 96.67%) respectively. This could be as a result of monthly budgetary allocation to state and local governments and anticipation of  N10bilion OMO maturity scheduled to hit the system tomorrow. Going forward, we expect activities in the Fixed Income space to be largely driven by CBN’s OMO sales and the availability of liquid in the system.

§  At the OMO auction today, CBN sold N5.7bn worth of 190-day at a stop rate of 17.8%. However, there was no subscription for the N10.00bn worth of 92-day bill that was offered.

§  In the bond market today, yields closed lower across most maturities due to slight improvement in system liquidity. The downtrend was most noticeable on the longer dated maturities, as the March 2027, March 2036 and April 2037 bond dropped -10bps to 14.98%, -9bps to 14.70% and -12bps to 14.70% respectively. Elsewhere, on the shorter end of the yield curve the July 2021 bond shed -17bps to close at 15.08%.

§  Going forward, we expect market activities to be determined by the level of liquidity in the system as well as foreign investors’ participation in the market.