SAT, MARCH 02 2019-theG&BJournal- Nigeria’s equities market extended its bearish run from the prior week, as the benchmark index shed 2.1% w/w to 31,827.24, moderating its YtD gains to 1.26%.
‘’Following the conclusion of the general election, we had anticipated an equities market pick-up as the tense political environment moderates. However, we reckon that investors remained on the fence, following the refusal of the opposition to concede defeat,’’ analyst at Cordros Capital said.
‘’ Amidst the still sensitive political landscape, we still hold the view that the blend of compelling valuation story, together with positive macroeconomic picture, leaves scope for market recovery in the medium-to-long term. However, we guide investors to tread the cautious trading path in the short term.’’
Across sector indices, losses in the Banking (-5.88%), Consumer Goods (-2.91%), and Oil & Gas (-1.33%) indices, offset gains in the Industrial Goods (+0.93%), and Insurance (-3.01%) indices respectively.
A total turnover of 1.752 billion shares worth N19.681 billion in 22,319 deals were traded this week by investors on the floor of the Exchange in contrast to a total of 1.481 billion shares valued at N17.647 billion that exchanged hands last week in 20,449 deals.
The Financial Services Industry (measured by volume) led the activity chart with 1.377 billion shares valued at N11.311 billion traded in 14,180 deals; thus contributing 78.63% and 57.47% to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 115.142 million shares worth N168.128 million in 1,126 deals. The third place was Consumer Goods Industry with a turnover of 113.079 million shares worth N6.051 billion in 2,993 deals.
Trading in the Top Three Equities namely, Diamond Bank Plc, Access Bank Plc and Zenith Bank Plc (measured by volume) accounted for 594.377 million shares worth N4.757 billion in 4,315 deals, contributing 33.93% and 24.17% to the total equity turnover volume and value respectively.
ETPs
Also traded during the week were a total of 101,254 units of Exchange Traded Products (ETPs) valued at N577,835.06 executed in 19 deals compared with a total of 23,701 units valued at N3.020 million that was transacted last week in 4 deals.
BONDS
A total of 25,740 units of Federal Government Bonds valued at N26,597 million were traded this week in 22 deals compared with a total of 5,845 units valued at N6.158 million transacted last week in 18 deals.
The NSE All-Share Index and Market Capitalization depreciated by 2.12% to close the week at 31,827.24 and N11.869 trillion respectively.
Similarly, all other indices finished lower with the exception of the NSE Insurance and NSE Industrial Goods indices which rose by 3.01% and 0.93% respectively while the NSE ASeM index closed flat.
Twenty-six (26) equities appreciated in price during the week, lower than thirty-four (34) in the previous week. Thirty-eight (38) equities depreciated in price, the same with thirty-eight (38) equities of the previous week, while one hundred and four (104) equities remained unchanged higher than ninety-six (96) equities recorded in the preceding week.
DEBT
A total volume of 122,245 units of 12.050% FGS FEB 2021and 223,650 units of 13.050% FGS FEB 2022 were admitted to trade at the Exchange on the 26th of February, 2019.
Money market
The overnight lending rate moderated by 136 bps w/w to close at 12.98%, amidst inflows from bond coupon payments (NGN38.97 billion), and tapered OMO activity, which helped to support liquidity early on in the week. The rate rose towards the end of the week, albeit below the previous week’s close, as the CBN mopped up Thursday’s OMO inflows (NGN399.31 billion), selling a whopping NGN1.08 trillion via OMO auction.
Next week, inflows from matured OMO bills (NGN128.86 billion) and FAAC disbursements to state and local governments will offer support to system liquidity. Barring any aggressive liquidity mop-up by the CBN, further contraction in the overnight rate is likely.
Treasury bills
Activities in the treasury bills market were significantly bullish, driven by (1) the significant level of the demand at the primary market auction, (2) increase demand from foreign investors, and (3) the CBN’s reduced OMO activity. Consequently, average yield crashed to 12.98%, representing a 136 bps w/w contraction. There was a significant rally at the long (-170 bps) of the curve, following the reduction on the stop rate on long tenored OMO bill, by 70 bps, to 14.30%. Buy sentiment was also evident at the short (-132 bps) and mid (-61 bps) segments. Notable bills include the 202DTM (-202 bps), 76DTM (-289 bps) and 167DTM (-305 bps), respectively. At this week’s primary action, the CBN fully allotted NGN115.12 billion worth of bills – NGN24.37 billion of the 91-day, NGN38.75 billion of the 182-day and NGN52.00 billion of the 364-day – at respective stop rates of 10.90% (previously 10.97%), 13.01% (previously 13.45%), and 14.37% (previously 14.95%). Stop rates moderated by an average of 35 bps following significant subscription (NGN727.35 billion), with the auction recording a bid-cover of 6.32x (vs. 2.86x previously).
‘’We expect demand in the NTB secondary to remain relatively strong, buoyed by expected buoyant liquidity, and barring aggressive liquidity mop-ups,’’ Cordros Capital said.
Foreign exchange
In line with the pattern in the last two weeks, the CBN recorded another foreign reserve depletion to the tune of USD233.15 million w/w to USD42.30 billion. The apex bank sold USD210 million across its different strata of FX windows, distributing USD100 million to the wholesale, USD55 million to the SMEs, and USD55 million invisible segments. Consequently, the naira appreciated by 0.13% to USD361.03 at the I&E window, but was flat at NGN360 in the parallel market. Meanwhile, total turnover at the I&E window surged by 162.7% to USD3.95 billion with 91.86% of trades executed within the NGN360-369/USD band. Similar to spot market, USD/NGN appreciated across all forward contracts — 1-month (+0.2% to NGN363.39), 3-month (+0.2% to NGN369.04), 6-month (+0.5% to NGN381.05), and 1-year (+1.7% to NGN404.99).
Looking ahead, the combination of still healthy foreign inflow, robust FX reserves and possibility of PFI resurgence in the near team, guides our views of currency stability for much of 2019.- Economic and Market Report courtesy CORDROS CAPITAL.
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