February 13, 2019/Cordros Update
EQUITIES
The Nigerian equities market bucked its positive run, as investors took profit from the gains in the prior sessions. Specifically, the benchmark index dipped by 0.15% to 32,413.92 points, on account of sell pressure across value stocks.
Accordingly, the Month-to-Date and Year-to-Date returns moderated slightly to 6.08% and 3.13% respectively.
The Industrial (+1.61%) and Consumer Goods (+0.89%) indices closed positive, following gains in DANGCEM (+0.37%) and UNILEVER (+10.00%). Meanwhile, the Banking (-1.79%), Oil & Gas (-2.24%) and Insurance (-0.73%) indices closed in the red, weighed by sell pressure in GUARANTY (-2.57%), SEPLAT (-3.33%), and CUSTODIAN (-3.23%) respectively.
Market breadth was negative, with 22 losers and 19 gainers, led by CILEASING (-9.95%) and BERGER (+10.00%) shares, respectively. Total volume of trades declined by 19.0% to 470.40 million units, valued at NGN4.24 billion and exchanged in 5,858 deals.
In the absence of a positive catalyst, as well as brewing political concerns, we guide investors to trade cautiously in the short-to-medium term. However, stable macroeconomic fundamentals remain supportive of recovery in the long-term.
CURRENCY
The naira traded flat against the dollar at NGN361 in the parallel market, while it depreciated marginally by 0.04% to NGN362.03 in the I&E FX window. Total volume of trades in the IEW rose by 15.9% to USD131.99 million, with trades consummated within the NGN360.00-NGN362.50/USD band.
FIXED INCOME AND MONEY MARKET
The overnight lending rate declined further by 433 bps to close at 21.17%, as amidst the absence of an OMO auction, system liquidity was supported by today’s inflow from bond coupon payments (NGN47.12 billion).
Proceedings in the NTB market were mixed, with a bearish tilt, as average yield widened by 2 bps to 14.70%. Sell pressure was concentrated at the short (+19 bps) end of the curve, following a selloff of the 8DTM (+64 bps) bill. On the flip side, yields contracted across the mid (-11 bps) and long (-3 bps) segments, driven by demand for the 169DTM (-97 bps) and 253DTM (-65 bps) bills, respectively. At today’s primary action, the CBN fully allotted NGN153.38 billion worth of bills – NGN3.38 billion of the 91-day, NGN10.00 billion of the 182-day and NGN140.00 billion of the 364-day – at respective stop rates of 10.97% (previously 11.00%), 13.40% (previously 13.50%), and 14.95% (previously 15.00%).
Trading in the bond market was also bearish, as average yield expanded by 12 bps to 14.79%. Sell pressure was concentrated at the short (+39 bps) end of the curve, with yield on the FEB-2020 (+147 bps) bond recording a significant expansion. Conversely, demand for the MAR-2027 (-6 bps) led to yield contraction at the mid (-2 bps) segment. Yield at the long end of the curve was flat.
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