August 7, 2019/Cordros Report

EQUITIES

The Nigerian equities market sustained its losing streak for the second consecutive sessions, as the benchmark index dipped by 0.42 to 27,412.13 points, following sell-offs in DANGCEM and ZENITHBANK shares. Consequently, the Month-to-Date and Year-to-Date losses worsening to -1.10% and -12.78% respectively.

Elsewhere, the total volume of trades decreased by 24.46% to 128.96 million units, valued at NGN1.18 billion, and exchanged in 3,118 deals. FBNH was the most traded stock by volume at 30.90 million units, while MTNN was the most traded by value at NGN390.74billion.

The Oil & Gas was the sole gainer across sectors, with the index rising by 0.19%. Conversely, the Insurance (-1.92%), Industrial Goods (-0.70%), Banking (-0.44%) and Consumer Goods (-0.04%) indices all closed in the red. Market sentiment, as measured by market breadth, was negative (0.56x) as 17 tickers recorded losses relative to 11 gainers. On the decliners list, REDSTAREX (-9.85%) and CONTINSURE (-9.68%) recorded the largest losses, while AIICO (+9.38%) and CONOIL (+6.33%) led the gainers’ list.

Our outlook for equities in the short to medium term remains conservative, amidst the absence of any catalysts to drive positive market returns.

CURRENCY

The naira traded flat against the US dollar at NGN360.00/USD in the parallel market, while it appreciated by 0.03% to NGN362.83/USD at the I&E FX window.

MONEY MARKET AND FIXED INCOME

The overnight lending rate widened by 485 bps to 9.79%, as the CBN’s mopped up excess liquidity via OMO auction. The CBN sold a total of NGN114.59 billion bills – NGN17.74 billion of the 85DTM, and NGN96.85 billion of the 344DTM — at respective stop rates of 11.30% (previously 11.40%) and 12.00% (previously 12.25%) respective. However, no sale was made at the mid tenue.

Activities in the Treasury bills market were bearish, as the average yield widened by 39 bps to 11.65%. Investors’ sell-offs of the 57DTM (+187 bps), 183DTM (+97 bps) and 204DTM (+66 bps) bills led to yield expansions across the short (+67 bps), mid (+38 bps) and long (+31 bps) tenor segments of the yield curve respectively.

Similarly, trading at the bonds market was bearish, as the average yield expanded by 20bps to 13.66%. Sell-offs of the FEB-2020 (+120 bps), MAR-2027 (+46 bps) and APR-2037 (+15 bps) bonds, led to yield expansions at the short (+36 bps) and mid (+16 bps) and long (+4 bps) segments of the curve.

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