Nigerian Equities Close Session Down 0.35% on Decline in Major Counters

August 31, 2017/InvestmentOne Research

Please click to download the Market Report for Thursday 31st August 2017

EQUITIES:  

  • The equities market closed the last trading session of the week negative, shedding    -0.35% to 35,504.62pts, representing a market capitalisation of N12.24tr. WTD and MTD the ASI fell by -3.12% and -0.95% respectively.
  • Today’s performance was largely driven by the declines in NB (-92pts), STANBIC (-50pts) and UBA (-37pts), which outweighed the gains in DANGCEM (+24pts) and ZENITHBANK (+18pts).
  • Despite the negative close, market breadth index ended positive (+0.07x) as 27 stocks gained compared with 20 stocks that declined. JBERGER (-5.00%) was the market’s worst performer against CONTINSURE (+5.00%), which topped the gainers’ chart.
  • Also, market activity increased with total volume and value up +11% and +38% respectively as investors exchanged 267m units of shares worth N4.04bn. SOVRENINS was the most actively traded stock with 100m units of shares exchanged while DANGCEM (+0.23%) led the market in regards to value with N1.49bn worth of shares traded.
  • In the near term, we expect the market to be volatile as Q2 2017 earnings season comes to an end. Nonetheless, we see the recent sell-off as an entry opportunity in our recommended quality names.

CURRENCY:

  • The local currency gained +0.19% to N359.67 against the USD at the IEFX window today. However, it lost -0.83% to N460.97 and N425.08 against the GBP and EUR respectively.
  • At the parallel market, the NGN closed relatively unchanged at N365 against the USD and N432 against the EUR while it gained +0.85% to N468 against the GBP.
  • Going forward, we expect the local currency to continue to see support from CBN’s FX intervention sales.

FIXED INCOME:

  • CBN maintained its stance on squeezing system liquidity today, selling N18.6bn worth of 175 day OMO bills at 17.95% stop rate. However, the Open Buy Back and Overnight rates fell to 7.33% and 8.42%, from 15.50% and 16.09% yesterday, as N101bn worth of OMO bills matured today. At the time of writing NIBOR rates for today were yet to be published.
  • At the bond market, investors were largely bullish today which may not be unconnected with the inflows from the OMO maturity. While the yields on the 7yr and 10yr benchmark bonds closed unchanged at 16.57% and 16.76% respectively, yield on the 5yr benchmark bond fell by 3bps to 16.47%.
  • Going forward, we expect market activity to be influenced by liquidity levels.

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