27/5/2019/Cordros Report

EQUITIES

The Nigerian equities market kicked-off the week on a bearish note as the benchmark index declined by 2.22% — largest decline since Jan. 9, 2019 — to 30,194.71 points, following profit taking in MTNN and DANGCEM shares.

Thus, the Month-to-Date return moderated to 3.55% and Year-to-Date loss increased to 3.93% respectively.

On sectoral performance, losses in the Industrial Goods (-2.32%) and Oil & Gas (-0.39%) indices offset gains from Banking (+1.02%), Consumer Goods (+0.73) and Insurance (+0.04%) indices. Notable stocks include DANGCEM (-4.00%), OANDO (-2.27%), ETI (+9.45%), UNILEVER (+8.71%), and SOVRENIN (+8.70%), respectively.

Market breadth was negative, with 19 losers and 14 gainers, led by RTBRISCOE (-9.38%) and NEIMETH (+9.80%) shares, respectively. Total volume of trades declined by 49.60% to 148.21 million units, valued at NGN2.22 billion, and exchanged in 3,654 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 depreciated by 0.06% to NGN360.59 in the I&E FX window, but closed flat at NGN361.00 at the parallel market. Total turnover in the IEW decreased by 36.63% to USD 217.08 million in last Friday’s session, with trades consummated within the NGN356.00-NGN362.50/ USD band.

MONEY MARKET & FIXED INCOME

The overnight lending rate expanded by 329 bps to 15.29%, as banks funded for the weekly FX wholesale auction.

Activities in the treasury bills market were mixed, with a bearish tilt, as average yield expanded by 1 bp to 12.16%. Sell pressure was concentrated at the mid (+4 bps) segment, with yield on the 150DTM (+50 bps) bill expanding. Conversely, demand for the 84DTM (-12 bps) bill led to yield contraction at the short (-2 bps) end of the curve. Yield at the long segment was flat.

Trading in the bond market was similarly mixed, with a bearish bias, as average yield expanded by 1 bp to close at 13.82%. Sell pressure was spread across the short (+3 bps) and mid (-1bps) segments, with respective yields on FEB-2020 (+20 bps) and JAN-2026 (+2 bps) bonds expanding. Conversely, demand for JUL-2034 (-4 bps) bond, led to yield contraction at the long (-1 bp) end of the curve.

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