November 19, 2018/Cordros Update
EQUITIES
- The equities market started the week positive, as the ASI rose 0.51% to 32,222.24 points, owing to interest in Consumer Goods stocks.
- Accordingly, the Month-to-Date and Year-to-Date losses moderated to 0.75% and 15.74%, respectively.
- The Consumer Goods (-1.37%) index was the top gainer, following price appreciations in index heavyweights NB (+2.66%) and NESTLE (+1.35%). The Insurance (+0.80%) and Banking (+0.38%) indices followed suit, driven by interest in CONTINSURE (+6.38%) and FBNH (+2.01%). Conversely, a decline in FO (-7.77%) led to a loss in the Oil & Gas (-0.14%) index. The Industrial Goods index closed flat.
- Market breadth was positive with 26 gainers and 5 losers, led by GLAXOSMITH (+9.96%) and MBENEFIT (-8.00%) stocks respectively. Total volume and value of trades dropped by 9.8% and 35.6% to 148.10 million units and NGN1.80 billion, respectively, exchanged in 2,853 deals.
- We reiterate our negative outlook for the equities market in the short to medium term, amidst political concerns ahead of the 2019 elections, and the absence of a positive market trigger. However, positive macroeconomic fundamentals remain supportive of recovery in the long term.
CURRENCY
- The naira weakened against the dollar by 0.27% to NGN364 in the parallel market (highest since 28th May 2018), while it strengthened by +0.09% to NGN363.69 in the I&E FX window. Total turnover in the IEW fell by 39.6% to USD108.17 million in Friday’s session, vs. the previous session, with trades consummated within the range of NGN357.00-NGN365.00/USD. Meanwhile, the apex bank, on Friday, intervened in the FX market, injecting USD310.03 million into the interbank retail Secondary Market Intervention Sales (SMIS), and selling CNY62.18 million in spot and short-tenured forwards.
FIXED INCOME AND MONEY MARKET
- The overnight lending rate rose 366 bps to 10.83%, from 7.17% in the previous session, as banks provisioned for the CBN’s wholesale FX intervention.
- Trading in the treasury bills market was mixed, as average yield closed flat at 14.00%. Yield expanded at the long (+3 bp) end of the curve, owing to a selloff of the 311DTM (+30 bps) bill. Conversely, yield contracted at the short (-2 bps) segment, following interest in the 10DTM (-42 bps) bill. Yield at the mid segment was flat.
- Activities in the bond market were also mixed, albeit with a bullish bias, as average yield moderated by 2 bps to 15.40%. Demand was concentrated at the short (-5 bps) and long (-2 bps) ends of the curve, with respective yields on the FEB-2020 (-33 bps) and JUL-2034 (-5 bps) bonds contracting. Conversely, a selloff of the JAN-2026 (+2 bps) bond led to yield expansion at the mid (+1 bp) segment. At the FGN bond auction scheduled for Wednesday, the DMO will offer NGN115 billion – NGN35 billion of the APR-2023 (re-opening), NGN35 billion of the MAR-2025 (re-opening), and NGN45 billion of the FEB 2028 (re-opening) – in bonds to investors.