July 13, 2018
Lagos (INVESTADVOCATE)-Sentiments on Friday remained bearish in the Nigerian equities market, as the benchmark index dipped further by 0.62 percent week-on-week ( w/w) to 37,392.77 points.
“Of the five trading sessions, four closed in the red, as sell pressure persisted across major sectors. All sector indices – Insurance (-5.10 percent), Banking (-2.10 percent), Industrial Goods (-1.29 percent), and Consumer Goods (-0.43 percent) – save for the Oil & Gas (+0.71 percent) index, closed lower,” according to Cordros weekly market report.
Cordros reports that 52 stocks closed negative led by Tantalizer Plc with a loss of -25 percent, while 19 closed positive, led by C & I Leasing Plc with a gain of +10.22 percent.
“We guide investors to trade cautiously in the short-to-medium term, amidst continued selloffs, and the absence of a foreseeable one-off trigger in the near term. However, our positive view of Nigeria’s long term macroeconomic outlook, in addition to the likelihood of lingering external risks settling, remain supportive of long-term gains,” the Cordors report affirmed.
On the international scene, Cordros reports that proceedings across global markets within its coverage turned broadly positive, with Asia (CSI 300: +3.79 percent, Nikkei 225: +3.71 percent) recording the strongest rebound, as investors ignored trade war concerns, despite the Trump administration announcement of $200 billion in new tariffs on China.
The report says gains persisted in the US (S&P 500: +1.27 percent, DJIA: +1.84 percent) and Euro area (Euro Stoxx 50: +0.03 percent, FTSE 100: +0.66 percent), amidst corporate earnings releases, economic data, and a tech rally in the US.
“Returns in the emerging market (MSCI EM: +0.97) also turned positive, driven by gains in China, India (+2.48 percent), and Brazil (+1.21 percent),” the Cordros report affirmed.
According to the weekly update, gains were sustained in the frontier markets, despite continued selloffs in Nigeria (-0.62 percent), Kenya (-0.63 percent), and Morocco (-1.67 percent).
The report says activities in the treasury bills market were bullish, with sentiments supported by relatively healthy liquidity. Consequently, average yield moderated 20 bps to 12.18 percent.
Investor sentiment was positive across the short (-31 bps), mid (-13 bps), and long (-2 bps) ends of the curve, amid increased demand for the 41DTM (-92 bps), 97DTM (-76 bps), and 244DTM (-38 bps) bills respectively.
“In the coming week, we expect a reversal of the bullish trend on the back of anticipated squeeze in liquidity. At the NTB auction scheduled for Wednesday, the CBN will offer NGN178.41 billion – NGN5.85 billion of the 91-day, NGN26.6 billion of the 182-day, and NGN1145.96 billion of the 364-day – worth of bills to the market,” Cordros reports.
Also, trading in the bond market was mixed, albeit with a bearish tilt, as yields fell by 3 bps on average, w/w, to 13.89 percent.
The reports says there was investor interest at the mid (-4 bps) and long (-8 bps) ends of the curve, with the FEB-2028 (-13 bps) and MAR-2036 (-19 bps) bonds recording the most significant contractions, respectively. Conversely, yield expanded at the short (+4 bps) segment, following selloffs of the JUL-2021 (+14 bps) bond.
“Our theme for the bond market favours higher yields in the medium term, anchored on (1) weakening signs of monetary easing, (2) capital flight amid higher yields in safe haven assets, (3) political uncertainty stemming from the upcoming elections, and (4) increased government borrowing to fund the 2018 budget,” Cordros said.