October 26, 2017/InvestmentOne Research

EQUITIES:  

·         The Nigerian equities reversed its previous gains as it lost -0.29% today.

·         The downward close was as a result of sell-offs in some mid and large cap stocks such as NEM (-5.00%), NB (-3.73%), GUARANTY (-0.71%) and UBA (-0.64%), which offset the gains in NASCON (+10.18%), DANGFLOUR (+10.13%%) and DANGSUGAR (+8.79%) to close at 36,517.48 pts.

·         Market breadth index closed negative (-0.08x) as 19 stocks gained compared to 27 stocks that recorded losses. NASCON (+10.18%) was the best performer while NEM (-5.00%) topped the losers’ chart.

·         Banking (-0.24%), Insurance (-1.16%) and Consumer Goods (-1.04%) sectors lost, while Industrial (+1.02%) sector closed the day in green.

·         Investors exchanged c.356m units of shares worth N4.22bn. This represents a 7.12% improvement in trade volume and 9.56% decline in value.

           With few 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 advise entry into them. 

CURRENCY:

• The NGN shed 0.01%  to close at N360.40 against the USD. Conversely, it closed N474.13 and N419.88 against the GBP and EUR respectively.
• At the parallel market the NGN closed flat against the USD and GBP at N363 and N475 respectively. However, it lost -0.24% against the EUR to close at N426.
• In the near term, the local currency should continue to see support from CBN intervention sales of the USD.
  

FIXED INCOME:

§  The Overnight and OBB rates dropped further to 18.58% and 16.50% from 101% and 96.67% respectively as market liquidity conditions improved. The improvement in liquidity could be as a result of monthly statutory disbursement and OMO maturity which hit the system today.

§  Nonetheless, CBN continued its daily OMO auction selling N5.73bn worth of 190 day paper at stop rate 17.8%.

§  Following yesterday’s bond auction, the bond market was fairly quiet today as yields on most maturities remain unchanged  (5yr and 20yr), with the 10yr bond falling by 3bps to close at 14.95%.

§  Going forward, we expect rally in the bond market on the back of improved liquidity conditions and renewed offshore interest in that segment of the market.  .