April 24, 2018/Cordros Update
EQUITIES
- The Equities market halted two consecutive sessions of losses, with the ASI inching higher by 0.10% to 40,802.78 points, following interests in value stocks.
- Accordingly, the Month-to-Date and Year-to-Date returns improved to -1.69% and 6.69% respectively.
- The Oil & Gas (+0.85%) index posted the largest gain among sectoral indices, owing to demand for FO (+10.18%) shares. The Consumer Goods (+0.72%) and Banking (+0.51%) indices also recorded gains, following interests in the shares of NESTLE (+5.00%) and ZENITHBANK (+2.57%) respectively. On the flip side, the Industrial Goods (-0.38%) and Insurance (-0.35%) indices remained in negative territory, driven by continued selloffs in WAPCO (-0.80%) and CONTINSURE (-4.82%) respectively.
- Market breadth was flat, with 25 gainers and losers apiece, led by FO (+10.18%) and FIDSON (-9.60%) respectively. Total volume and value of trades were lower, falling 53.50% and 58.55%, to 246 million units and NGN3.22 billion, respectively, exchanged in 4,918 deals.
- In our view, legroom for gains still exist in the medium to long term, on the back of (1) dropping fixed income yields, (2) relatively lower stock prices, and (3) still-positive macroeconomic fundamentals.
CURRENCY
- The USD/NGN appreciated by 0.15% to NGN360 in the I&E FX window, while it remained flat at NGN363 in the parallel market. Total turnover in the I&E FX inched lower by 2.78% to USD217.57 million, consummated within the NGN330-NGN361/USD band.
FIXED INCOME & MONEY MARKET
- The overnight lending rate softened by 25 bps to 3.00%, from 3.25% in the previous session, as market liquidity remained buoyant.
- Proceedings were bullish in the NTB market, benefiting from high system liquidity, as average yield dropped 3 bps to 11.03%. Buy sentiment was spread across the short (-5 bps) and mid (-8 bps) ends of the curve, with yields on the 9DTM (-57 bps) and 149DTM (-63 bps) bills moderating significantly. Conversely, yields expanded across the long (+3 bps) segment, driven by selloffs in the 212DTM (+45 bps) bill.
- The bond market traded on a slightly bearish note, as market players sold off ahead of tomorrow’s primary auction. Consequently, average yield rose by 8 bps to 12.68%. Yields expanded across all ends of the curve – short (+12 bps), mid (+4 bps), and long (+8 bps) – driven by selloffs of the FEB-2020 (+57 bps), MAR-2027 (+6 bps), and APR-2037 (+12 bps) bonds, respectively. At tomorrow’s auction, the DMO plans to offer NGN90 billion – NGN30 billion of the APR-2023 (new issue), NGN30 billion of the MAR-2025 (re-opening) and NGN30 billion of the FEB 2028 (re-opening) – in bonds to investors.
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