Bulls Resurface on Nigerian Equities Market, Month-to-Date Loss Moderates to -0.67%

L – R: Shows Oscar Onyema, CEO NSE with Paul Smith, President/CEO, CFA Institute after Oscar’s Keynote presentation, titled: “Investing In Nigeria: Exploring the Investment Potential of One Africa’s Leading Economy” at 71st CFA Institute Annual Conference, “themed: Future of Global Investing” in Hong Kong on Monday.

May 16, 2018/Cordros Report

EQUITIES

  • Gains resurfaced in the equities market, as the ASI increased by 0.90% — largest gain since 27th April – to 40,992.97 points. This was largely attributable to renewed interests in DANGCEM shares.
  • The Month-to-Date loss moderated to -0.67%, while the Year-to-Date gain improved to 7.19%.
  • The Consumer Goods (+1.63%) index posted the largest gain, while the Industrial Goods (+0.74%) and Insurance (+0.31%) indices followed suit, owing to demands for UNILEVER (+4.91%), DANGCEM (+2.67%), and MANSARD (+4.70%) shares respectively. On the flip side, the Banking (-0.39%) and Oil & Gas (-0.34) indices closed lower, driven by profit-taking in the shares of ACCESS (-1.79%) and FO (-3.13%).
  • Market breadth remained negative, with 30 losers and 15 gainers, led by SKYEBANK (-9.41%) and CUTIX (+5.00%) respectively. Total volume of trades increased by 27.60% to 259.49 million units, valued at NGN4.36 billion, and exchanged in 4,000 deals.
  • Strengthening macroeconomic fundamentals remain supportive of our outlook for gains in the equities market.

CURRENCY

  • Pressure on the naira eased in the I&E FX window, as the USD/NGN appreciated by 0.23% to NGN360.77 – reversing accumulated loss of 0.16% in the last two sessions – while it remained flat at NGN363 in the parallel market. Meanwhile, total turnover in the IEW dropped by 36.78% to USD215.87 million, traded within the NGN314.50-NGN363/USD band. Yesterday, the apex bank injected USD210 million into the FX market, allocating USD100 million to the wholesale window and USD55 million apiece to the SMEs and invisibles segments.

FIXED INCOME & MONEY MARKET

  • The overnight lending rate rose by 825 bps to 24.67%, amidst persisting strain in liquidity. OMO and treasury bills worth NGN262.61 billion and NGN67.68 billion will mature into the system tomorrow.
  • Proceedings in the NTB market were bearish, as average yield increased by 14 bps to 13.05%. The mid (+7 bps) and long (+83 bps) ends of the curve recorded yield expansions, while yield contracted at the short (-58 bps) segment. Notable bills include the 120DTM (+127 bps), 309DTM (+191 bps), and 29DTM (-183 bps) respectively. At today’s NTB auction, NGN3.38 billion, NGN16.92 billion, and NGN13.54 billion of the 91-day, 182-day, and 364-day bills were allotted. The bills were 2.16x oversubscribed, with yields closing lower across the 182-day (10.50%; previously 10.95%), and 364-day (10.70%; previously 11.15%) bills. The yield on the 91-day was unchanged, closing at 10.00%.
  • Sentiments were mixed in the bond market, albeit with a bearish bias, as average yield inched up 2 bps to 13.18%. Yield expanded at the short (+1 bp), mid (+2 bps), and long (+3 bps) ends of the curve, following selloffs of the JUL-2021 (+15 bps), MAR-2027 (+4 bps), and APR-2037 (+5 bps) bonds.

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