April 9, 2018/Cordros Update

EQUITIES

• The domestic bourse opened the week on a negative note, with the All Share index dropping by 1.01% to 40,429.18 points, as investors extended profit-taking in value stocks.

• Accordingly, the Month-to-Date and Year-to-Date returns moderated to -2.59% and 5.72% respectively.

• The Industrial Goods (-3.87%) index posted the largest loss, owing to a selloff in WAPCO (-7.24%), and profit taking in DANGCEM (-1.14%). We attribute the selloff in WAPCO to the disappointing FY-17 results released by the cement producer over the weekend, wherein a loss after tax of NGN34.6 billion was reported, from a profit of NGN16.9 billion in the previous year. Meanwhile, a final dividend of NGN1.50/s was declared, translating to a 3.66% dividend yield. The Banking (-0.93%) and Consumer Goods (-0.85%) indices also recorded negative returns, as investors booked profit in the shares of GUARANTY (-0.45%) and GLAXOSMITH (-9.61%) respectively. Meanwhile, interests in PRESTIGE (+9.30%) stocks led to a gain in the Insurance (+0.90%) index, while the Oil & Gas index closed flat.

• Market breadth remained negative, with 30 losers and 17 gainers, led by CILEASING (-9.30%) and LEARNAFRICA (+9.28%). Total volume of trades dropped (the first time in five trade sessions) by 42.82% to 287.04 million units, valued at NGN4.95 billion, and exchanged in 4,285 deals.

• Despite continued selloffs, we reiterate our positive outlook for the equities market, as relatively lower share prices, as well as still-positive macroeconomic fundamentals, suggests legroom for gains still exist.

CURRENCY

• The USD/NGN remained flat at NGN362 in the parallel market, while it weakened by 0.09% to NGN360.33 in the I&E FX window. Total turnover in the I&E FX window dropped by 54.72% to USD259.03 million, traded within the NGN359.00 – NGN361.50/USD band.

FIXED INCOME & MONEY MARKET

• The overnight lending rate dropped by 50 bps to 3.50%, against Friday’s close of 4.00%, amidst the absence of OMO auction to mop-up buoyant liquidity in the system. 

• Average yield contracted by 9 bps to 14.52% in the NTB market. High demand for the 17DTM (-44 bps), 164DTM (-29 bps), and 213DTM (-89bps) bills caused contractions at the short (-5 bps), mid (-6 bps), and long (-14 bps) ends of the curve, respectively.

• Similarly, activities were bullish in the bond market, as average yield declined by 2 bps to 13.60%. Yields fell across the short (-5 bps) and mid (-4 bps) ends of the curve, driven by demand for the JUN-2019 (-13 bps) and JAN-2026 (-9 bps) bonds, respectively. Conversely, selloffs of the MAR-2036 (+9 bps) bond led to yield expansion at the long (+3 bps) segment.

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