June 27, 2018/Cordros Update
EQUITIES
- The equities market remained negative, as the ASI inched lower by 0.06% to 37,963.93 points, amidst sell pressures in value stocks.
- Thus, the Month-to-Date and Year-to-Date returns dipped to -0.37% and -0.73% respectively.
- The Insurance (-0.83%), Banking (-0.58%), and Consumer Goods (-0.16%) indices closed negative, owing to selloffs of PRESTIGE (-5.00%), ZENITHBANK (-1.96%), and CADBURY (-3.85%) shares respectively. On the flip side, the Industrial Goods (+0.90%) and Oil & Gas (+0.30%) indices closed positive, owing to demands for the shares of WAPCO (2.43%) and TOTAL (3.72%) respectively.
- Market breadth worsened, with 35 losers and 12 gainers, led by JAPAULOIL (-7.32%) and CILEASING (+4.66%). Total volume of trades increased by 31.02% to 372.24 million units, valued at NGN3.18 billion, and exchanged in 3,800 deals.
- In the absence of near-term one-off positive catalysts (save for likely better-than-expected Q2 earnings results), we posit a cautious approach towards risky assets in the short-to-medium term, despite supportive macroeconomic fundamentals. That said, we continue to see value in taking long term position in fundamentally sound stocks, particularly those with consistent dividend paying history.
CURRENCY
- The USD/NGN remained unchanged at NGN362 in the parallel market, while it strengthened by 0.11% to NGN360.91 in the I&E FX window. Total turnover in the IEW rose by 56.32% to USD252.92 million, traded within the NGN350-NGN362.50/USD band. Meanwhile, yesterday, the apex bank injected USD210 million into the FX market, allocating USD100 million to the wholesale window, and USD55 million apiece to the SMEs and invisibles segments.
FIXED INCOME AND MONEY MARKET
- The overnight lending rate expanded by 1,458 bps, closing at 52.58%, due to strained liquidity in the absence of any significant inflows.
- Proceedings in the NTB market were mixed, as average yield was flat, closing at 13.00% once again. Selloffs occurred at the short (+6 bps) end of the curve, with the yield on the 15DTM (+24bps) bill expanding. Conversely, yield at the mid (-5 bps) and long (-1 bp) segments contracted, driven by demand for the 99DTM (-43 bps) and 190DTM (-190 bps) bills, respectively.
- Bearish sentiments returned to the bond market, as average yield rose by 4 bps to 13.65%. Yields expanded at the short (+8 bps), mid (+2 bps), and long (+2 bps) ends of the curve, following selloffs of the JUL-2021 (+14 bps), MAR-2027 (+6 bps), and MAR-2037 (+16 bps) bonds, respectively.