Stocks Extend Losses Third Consecutive Session on Sell-Offs across Major Counters

August 30, 2017/Cordros Research

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EQUITIES

  • The equities market extended losses for the third consecutive session, as sell offs ensued across most sector indices.
  • Following the three days of profit taking, the Month-to-Date (-0.60%) return turned negative, while the Year-to-Date return moderated to 32.58%.
  • The Industrial Goods (-1.84%) index led the losers for the second session, following selloff in the shares of DANGCEM (-3.82%). The Banking (-0.77%), Oil & Gas (-0.48%), and Consumer Goods (-0.15%) indices also recorded negative returns, as investors sold off the shares of GUARANTY (-0.51%), MOBIL (-4.99%), and GUINNESS (-2.57%), respectively. Conversely, the Insurance (+0.30%) index closed positive, following interest in CONTINSURE (+4.48%) stock.
  • Market breadth remained weak, with 31 losers and 7 gainers, led by the shares of FIRSTALUM (-5.00%) and CUTIX (+9.95%), respectively. However, total volume traded increased by 66.08% to 239 million units, valued at N2.93 billion, and exchanged in 4,371 deals.
  • Corporate Release: H1-2017 earnings; FIDELITYBK (PAT: N9.04 billion vs.N5.46 billion).
  • We expect the market to close positive in tomorrow’s session, as investors engage in bargain hunting.

CURRENCY

  • At the time of writing, the CBN’s referenced USD/NGN closed flat at N305.85. In the interbank, the Bloomberg’s referenced NAFEX rates appreciated across board, with the USD/NGN (+0.15%), GBP/NGN (+0.10%), and EUR/NGN (+0.84%) closing at respective rates of N359.50, N464.93, and N428.94. Similarly, in the parallel market, the NGN strengthened against all the currencies we track – USD (+0.54%), GBP (+0.63%), and EUR (+0.46%) – to N366, N472 and N432, respectively. In the I&E FX window, the FMDQ’s referenced USD/NGN (+0.15%) strengthened to N359.

FIXED INCOME AND MONEY MARKET

  • The overnight money market rate expanded by 108 bps to 16.08% from 15.00% yesterday. The expansion in rate is attributable to the reported decrease in system liquidity by 18.41% to N126.86 billion deficit, following an NTB auction today, wherein the apex bank offered bills worth N193.14 billion.
  • The treasury bills market remained bullish, with average yield contracting marginally by less than 1 bp to 18.44%. Yields at the mid (-3 bps) and long (-4 bps) ends of the curve contracted to 18.83% and 18.51%, respectively, as investors demanded for the 14-DEC-2017 (-32 bps), and 8-MARCH-2018 (-47 bps) bills. Meanwhile, yield at the short (+7 bps) segment expanded to 17.96%, following selloffs in the 5-OCT-2017 (+58 bps) bill. The result of today’s NTB auction was unavailable at the time of writing.
  • Conversely, activities in the bonds market were bearish, with average yield expanding by 2 bps to 16.64%. Yields at the mid (less than 1 bp) and long (+4 bps) ends of the curve expanded to 16.72% and 16.79%, respectively, while yield at the short (-3 bps) end of the curve contracted to 16.58%. The notable bonds include 27-JAN-2022 (+14 bps), 15-JULY-2021 (less than 1 bp) and 29-JAN-2019(- 3 bps), respectively.

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