March 14, 2018/Cordros Update
EQUITIES
- Investors in the equities market were downbeat, with the ASI declining by 0.54% to 42,839.49 points.
- Accordingly, the Month-to-Date and Year-to-Date returns moderated to -1.13% and 12.02% respectively.
- The Banking (-1.45%) index posted the largest loss – marking its third consecutive session of loss – followed by the Consumer Goods (-0.72%) and Oil & Gas (-0.27%) indices. On the flip side, the Industrial Goods (+0.09%) and Insurance (+0.06%) indices remained positive. The notable shares include ZENITHBANK (-1.81%), DANGSUGAR (-4.93%), JAPAULOIL (-9.09%), DANGCEM (+0.15%), and MANSARD (+1.10%) respectively. It is worth stating that GUARANTY closed flat, following release of the FY-2017 results which showed fair performance, with Gross earnings inching higher by 1.11%, and PAT improving by 28.87% to NGN174.47 billion.
- Market breadth remained negative with 40 losers and 15 gainers, led by LASACO (-9.52%) and CILEASING (+7.78%) respectively. Total volume of trades continued to decline, dropping 8.44% to 373.52 million, valued at NGN5.85 billion, and exchanged in 5,220 deals.
- Our outlook for the equities market remains positive, supported by strengthening macroeconomic fundamentals and declining fixed income yields (improving attractiveness of equities investments).
CURRENCY
- The USD/NGN rate strengthened marginally by 0.01% to NGN360.25 in the I&E FX window, while it weakened by 0.28% to NGN363 in the parallel market. Total turnover in the I&E FX window declined by 52.67% to USD322.83 million, with transactions settled within the NGN351 to NGN361/USD rate.
FIXED INCOME AND MONEY MARKET
- The overnight lending rate fell 383 bps to 6.25%, on expectations of inflows from (1) FX refunds by the CBN, (2) coupon payments worth NGN51.12 billion from the MAR-2024 bond, and (3) maturing OMO (NGN261.86 billion) and treasury (NGN191.44 billion) bills tomorrow.
- Proceedings were bullish in the NTB market, as average yield decreased by 14 bps to 14.78%. High demand for the 29DTM (-96 bps), 134DTM (-55 bps), and 253DTM (-56 bps) bills led to yield contraction at the short (-18 bps), mid (-8 bps), and long (-10 bps) ends of the curve, respectively. Meanwhile, at today’s NTB auction, NGN6.22 billion, NGN4.00 billion, and NGN85.50 billion of the 91-day, 182-day, and 364-day bills were allotted. The bills were 1.8x oversubscribed, with yields closing lower across the 91-day (11.75%; previously 11.85%), 182-day (13.00%; previously 13.50%), and 364-day (13.19%; previously 13.50%) bills.
- Average yield in the bond market also fell, decreasing by 4 bps to 13.40%. Yields contracted at the mid (-13 bps) and long (- 1 bp) ends of the curve, while yields at the short segment were flat. Notable bonds include the JAN-2026 (-18 bps) and JUL-2030 (-8 bps).
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