October 31, 2017/InvestmentOne Research

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EQUITIES:  

• The equities market closed positive today driven by the gains in Industrial; DANGCEM (+246pts) and CAP (+3.2pts), Consumer Goods; FLOURMILLS (+11pts) and DANGFLOUR (+6.5pts), as well as Oil and Gas; SEPLAT (+24pts), which more than offset the declines in ZENITHBANK (-46pts), ETI (-26pts) and FIDELITY (-8pts).
• Consequently, the ASI closed up +0.54% to 36,680.29pts representing a market capitalisation of N12.69tr. Similarly, ASI is up +3.50% MTD.
•  Major sectors closed in the green as Industrial (+1.11%), Oil & Gas (+1.00%) and Consumer Goods (+0.17%) ended positive while the Banking (-0.89%) sector closed negative.
• Market breadth index was negative (-0.03x) at the end of trading as 27 stocks declined compared with 24 stocks that gained. FIDSON (+5.00%) was the market’s best performer while FIDELITY (-6.17%) led the losers’ chart.
•  Also, total volume and total value improved by +48% and +67% respectively, compared to yesterday’s sessions, as investors exchanged 259m units of shares worth N3.05bn. DIAMONDBANK (-0.98%) led the market in terms of volume with a total of c.42.9m units of shares while GUARANTY led the value chart with N471m worth of shares exchanged.
• With Q3 2017 earnings season virtually over, we are likely to see the ASI remain volatile in the absence of a positive catalyst to drive the market further. Nonetheless, we see the recent sell-off as an entry opportunity in our recommended quality names.

CURRENCY:

• The NGN appreciated by +0.09% against the Euro to close at N418.48 at the IEFX window. Conversely, it lost -0.19% against the British Pound to end at N476.16 and -0.06% against the USD to N360.83.
• At the parallel market, the NGN traded flat against the USD and GBP to close at N363 and N475 respectively, while it gained +0.24% against the Euro to end the day at N423.
• Going forward, we expect CBN’s continuous intervention in the FX market to be supportive of the naira.
  

FIXED INCOME:

·         Despite the OMO auction by the Apex bank today, the Overnight and Open Buy Back rates declined to 19.25% and 17.17% from 20.00% and 18.00% respectively.

·         The Apex bank offered N20bn and N50bn of 86-day and 202-day OMO bills respectively. While the auction of the N20bn 86-day OMO bill ended with a no sale, c.N26bn of the N50bn 202-day OMO bill was sold at a stop rate of 17.80%. As at time of writing, NIBOR rates were yet to be published.

·         Bond yields closed flat across most maturities. While the yield on the 7yr benchmark bond rose +2bps to 15.03%, the yield on the 10yr benchmark bond fell by -1bps to 15.01%.

·         In the near term, we expect continued squeeze on system liquidity to constrain market activities in the bond market in the absence of foreign investor participation.

·         CBN will be conducting a N100bn T-bill auction tomorrow, where we expect the Apex bank to sell 91-day, 182-day and 364-day bills at relatively flat stop rates compared to the auction a fortnight ago.  

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