October 8, 2018/Cordros Update
EQUITIES
- The equities market started the week positive, as the ASI inched up 0.19% to 32,444.96 points, amidst bargain-hunting in value stocks.
- As a result, the Month-to-Date and Year-to-Date losses moderated to -0.98% and -15.16%, respectively.
- Among sectoral indices, the Insurance (+0.77%) index posted the largest gain, following interest in NEM (+5.42%) shares. The Banking (+0.42%) and Consumer Goods (+0.09%) indices also closed positive, owing to gains in the shares of ZENITHBANK (+0.93%) and NB (+0.33%), respectively. The Industrial Goods and Oil & Gas indices closed flat.
- Market breadth remained positive, with 16 gainers and 11 losers, led by UNITYBNK (+9.09%) and JOHNHOLT (-9.43%), respectively. Total volume of trades fell by 27.50% to 120.82 million units, valued at NGN1.34 billion, and exchanged in 2,662 deals.
- Our outlook for equities in the near-to-medium term remains conservative, in the absence of a near term positive catalyst and amidst brewing political concerns.
CURRENCY
- Increased demand pressure on the dollar led to a depreciation of the USD/NGN (-0.22%) to NGN364.61 in the I&E FX window, highest since 11th of August 2017, while it remained flat at NGN361 in the parallel market. Total turnover in the IEW rose by 104.7% to USD128.04 million, with total trades consummated within the NGN351-NGN365.30 band.
FIXED INCOME & MONEY MARKET
- The overnight lending rate fell by 1,192 bps to close at 10.58%, as inflows from the previously recalled Paris club refunds (c. NGN320 billion), which came in late last Friday, boosted liquidity.
- Trading in the NTB market was bearish, as average yield expanded by 3 bps to 13.29%. Selloffs of the 157DTM (+42 bps) and 346DTM (+44 bps) bills led to yield respective yield expansions at the mid (+1 bp) and long (+18 bps) segments. Conversely, yields contracted marginally at the short (-1 bp) end of the curve, following interest in the 17DTM (-21 bps) bill.
- Sentiments in the bond market were also bearish, as market players reacted to the increased offering indicated in the recently released Q4-18 bond issuance calendar. Consequently, yields rose by 9 bps, on average, to 14.87%. Yields expanded across the short (+21 bps), mid (+2 bps) and long (+5 bps) ends of the curve, following selloffs of the FEB-2020 (+36 bps), FEB-2028 (+8 bps) and APR-2037 (+13 bps) bonds, respectively.
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