July 11, 2018/Cordros Update
- Proceedings in the equities market remained negative, as the ASI declined further, by 0.45%, to 37,253.25 points, amidst continued sell pressure in value stocks.
- As a result, the Year-to-Date and Month-to-Date returns moderated to -2.59% and -2.68%, respectively.
- The Industrial Goods (-2.34%) index posted the largest loss among major sectoral indices, as investors sold off WAPCO (-5.17%) and DANGCEM (-0.88%) shares. The Insurance (-0.96%) and Consumer Goods (-0.46%) indices also closed negative, owing to sell pressure in the shares of SOVRENINS (-8.33%) and FLOURMILL (-0.81%) respectively. Gains resurfaced in the Oil & Gas (+1.73%) and Banking (+0.01%) indices, following interest in MOBIL (+9.39%) and ZENITHBANK (+0.83%) stocks, respectively.
- Market breadth remained negative for the fourth consecutive session, with 25 losers and 15 gainers, led by JBERGER (-10.00%) and CUSTODIAN (+10.00%). Total volume of trades increased by 34.65% to 287.09 million units, valued at NGN3.75 billion (-0.41%), and exchanged in 3,526 deals.
- We guide investors to trade cautiously in the short to medium term, as sideways trading is likely to persist, in the absence of a positive one-off catalyst. However, still-positive macroeconomic fundamentals remain supportive of gains in the long term.
- The USD/NGN remained unchanged at NGN361 in the parallel market, while it strengthened marginally by 0.01% to NGN361.87 in the IEW. Total turnover in the IEW rose by 30.37% to USD138.80 million, traded within the NGN359-NGN3630/USD band. Meanwhile, 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 AND MONEY MARKET
- The overnight lending rate declined further by 325 bps to 11.75%, in anticipation of inflows via OMO bill maturities, valued at NGN313.56 billion, in tomorrow’s trading session.
- Average yield trended northwards in the treasury bills market, expanding by 9 bps to 12.27%, amid bearish sentiments. Yields rose at all ends of the curve – short (+4 bps), mid (+17 bps), and long (+3 bps) – following selloffs of the 64DTM (+58 bps), 113DTM (+69 bps), and 218DTM (+10 bps) bills, respectively.
- Sentiments in the bond market were similarly bearish, as average yield rose by 7 bps to 13.89%. Selloffs of the FEB-2020 (+57 bps) and MAR-2024 (+8 bps) bonds led to yield expansion at the short (+22 bps) and mid (+2 bps) ends of the curve, respectively. Conversely, yield contracted at the long (-4 bps) segment, following investor interest in the MAR-2036 (-10 bps) bond.