ASI extends losing streak to seven sessions 

Bears dominated the Nigerian bourse today as the ASI closed both the day (-101bps) and week (-284bps) in the red, the seventh straight session of losses and fourth consecutive w/w decline. We highlight that all key sectors closed lower for the week. The Banking sector (-197bps d/d; -438bps w/w) was the biggest loser on the day and week, following declines in UBA (-493bps), GUARANTY (-199bps) and ZENITHBANK (- 130bps). The Consumer Goods (-106bps d/d; -362bps w/w) was next in line, pressured by declines in GUINNESS (-385bps), UNILEVER (-297bps) and NB (-60bps). The Industrial Goods sector (-2bps d/d; -1bps w/w) closed relatively flat on the day and the week. Finally, the Oil & Gas sector was midly up today (+2bps) as gains in MRSOIL (+495bps) offset a dip in ETERNA (-470bps), but still closed the week 19bps lower. 

With bears holding sway at week close and all market indicators persisting negative, we expect sentiment to remain bearish at week open.

Stock Watch: 

JAPAULOIL has lost 50% in thirteen consecutive sessions of losses. The stock currently trades at a record low of ?0.24 and has declined 52% ytd, making it the fifth worst performing stock on the exchange.

Yields trend downwards in T-bills space at week close

The CBN conducted an OMO auction today offering, ?200 billion across the 111DTM and 230DTM bills. Whilst the apex bank made no sale on the shorter dated bill, the bank sold N37 billion on the longer bill at a stop rate of 12.15% (effective yield: 13.16%). Amid this, trading in the T-bills space was titled towards selling as yields rose 8bps on average. Notably, yields on the 41DTM, 111DTM and 202DTM bills advanced 32bps, 94bps and 29bps to settle at 13.29%, 13.39% and 13.54% respectively. In contrast, trading in the bond market was positive, with yields on benchmark bonds declining 9bps on average today, with buying momentum concentrated on the short and long-dated maturities. In particular, yields on the 16.00% FGN JUN 2019, 16.39% FGN JAN 2022 and 12.40% FGN MAR 2036 bonds dipped 16bps 20bps and 13bps to close at 12.79%, 13.45% and 13.42% respectively. Overall, sentiment this week was largely mixed, with yields declining 4bps on average w/w in the T-bills space and advancing 5bps on average w/w on benchmark bonds. 

We expect relatively healthy system liquidity to support buying next week, particularly ahead of the ?300 billion 10.70% FGN MAY 2018 maturity. However, this may be capped by CBN liquidity mop up. The apex bank will be conducting a T-bills PMA next week, offering ?86 billion across the 182DTM and 364DTM bills. 

The CBN supported the Foreign Exchange market, by infusing $210 million at week open into various segments of the market. Amidst this, the naira depreciated ?0.72 and ?2.50 w/w at the I&E FX Window and in the parallel market to close at ?361.57 and ?365.50 against the dollar respectively.

We expect the naira to remain stable across the various windows of the currency space as the CBN continues to intervene in the FX market.