April 11, 2019/Cordros Update

EQUITIES

The Nigerian equities market sustained its recovery to close on a positive note as the benchmark index increased by 0.53% to 29,347.62 points, driven by gains in Banking stocks.

Thus, the Month-to-Date and the Year-to-Date losses moderated to -5.46% and -6.63% respectively.

On sectoral performance, the Insurance (+1.92%) index led the gainers, following a price appreciation in NEM (+10.00%). The Banking (+1.19%) and Industrial Goods (+0.82%) indices followed suit, with GUARANTY (+2.09%) and WAPCO (+3.90%) closing positive. The Consumer Goods (-0.06%) was the sole loser, weighed by a decline in FLOURMIL (-2.35%). The Oil & Gas index closed flat.

Market breadth was positive, with 15 gainers and 7 losers led by NEM (+10.00%) and IKEJAHOTEL (-9.76%) shares, respectively. Total volume of trades decreased by 53.5% to 224.03 million units, valued at NGN2.01 billion and exchanged in 3,127 deals.

In the absence of a positive catalyst, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals and compelling valuation remain supportive of recovery in the mid-to-long term.

CURRENCY

The USD/NGN appreciated by 0.05% to NGN360.14 in the I&E FX window, but closed flat at NGN360.00 at the parallel market. Total turnover in the IEW decreased by 38.87% to USD132.88 million, with trades consummated within the NGN357.50-NGN362.00/USD band

The overnight lending rate contracted by 571 bps to 10.57% following inflows of matured OMO bills (NGN33,02 billion), and in the absence of any OMO intervention by the CBN.

Sentiments in the treasury bills market were mixed, albeit with a bullish tilt as average yield fell marginally (-1 bp) to close at 13.28%. Buy sentiment was concentrated at the long (-5 bps) end of the curve, with the 238DTM (-21 bps) recording the most significant contraction. Conversely, selloffs of the 35DTM (+33 bps) and 98DTM (+127 bps) bills led to respective yield expansions at the short (+1 bp) and mid (+4 bps) segments.       
 
Activities in the bond market were bearish, as average yield expanded by 11 bps to 14.36%. Sell pressure was concentrated at the short (+29 bps) end of the curve, with yield on the JUN-2019 (+95 bps) bond expanding. On the flip side, demand for the JUL-2030 (-5 bps) and MAR-2036 (-8 bps) bonds led to yield contraction at the mid (+1 bp) and long (-5 bps) segments, respectively.

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