Equites Records Highest gain Since June 17, 2016

May 10, 2017/Cordros Research

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EQUITIES

  • The equities market recorded its largest daily gain since 17th June, 2016, with the All Share Index advancing by 2.95% to close at 27,546.58 points. Today’s gain was mainly driven by demand in familar names — banking and consumer goods names. In intra-day trading, the All Share Index climbed as high as 3.44%.
  • Today’s record performance pulled the Month-to-Date gain to 6.94% and swung the Year-to-Date (+2.50%) return into the green.
  • Banking names continued to entice investors. Here, we make specific reference to  ZENITHBANK (+5.61%), GUARANTY (+2.36%), and STANBIC (+6.48%). Similarly,  the Consumer Goods (+3.56%), Insurance (+0.67%), and Oil & Gas (+2.42%) indices advanced further, as investors bought into NESTLE (+5.00%), NB (+3.04%), NEM (+4.26%), CUSTODYINS (+4.84%), OANDO (+10.13%), and FO (4.98%) respectively. The Industrial Goods (-0.99%) index continued to shed weight, on the back of traders liquidating their holdings in WAPCO (-4.99%) and CCNN (-1.48%).
  • Market breadth improved, with 50 gainers versus 9 losers. Total volume traded increased by 8.32% to 584.12 million, valued at N5.65 billion, and exchanged in 5,121 deals.
  • We expect the positive trend to continue tomorrow, judging by the improved appetite for risk assets.

CURRENCY

  • In a bid to clear the backlog in demand, the apex bank plans to auction an undisclosed amount of dollars at the interbank market today, using a book building system, with the beneficiaries being the airline, fuel and raw material sectors. The bank said a cut-off rate at the auction would be applied at the marginal rate and those obligations due on fuel imports must have matured before the 31st of January, 2018 to qualify for the intervention. That said, today, at the interbank market, the naira strengthened against the dollar (+0.02%), pound (+0.01%), and euro (+0.11%) to N305.60, N410.51 and N342.47 respectively. In the parallel market, the EUR/NGN (+1.18%) strengthened to N420, while the GBP/NGN (-0.61%) weakened to N495 and the USD/NGN remained flat at N390. Meanwhile, the USD/NGN (+0.39%) strengthened to N380.89 in the IEFX market.

FIXED INCOME AND INTERBANK

  • The overnight rate expanded by 167 bps to 17.25%, owing to today’s OMO auction, wherein the apex bank mopped up N33.66 billion across the 190-DTM (N0.22 billion) and 330-DTM (N33.44 billion) bills respectively.
  • Investors were downbeat in the T-bills space, with average yield expanding by 2 bps to 18.41%. Yields at the mid (+6 bps) and long (+4 bps) segments were pressured, as investors sold-off the 17-AUG-17 (+ 51 bps) and 4-JAN-18 (+ 43 bps) maturities respectively. Conversely, yield at the short (-7 bps) end contracted, owing to demand for the 29-JUN-17 (-84 bps) bill.
  • Likewise, the bond market closed on a bearish note, as 95% of traded bonds  came under pressure. Yields at the short (+10 bps), mid (+1 bp), and long (+4 bps) end of the curve increased, as investor sold-off the JUL-2017 (+33 bps), 15-JUL-2021 (+1bp), and MAR- 2027 (+17 bps) bonds respectively. The result of today’s primary auction was not available at the time of writing.

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