06 June ( Lagos)

After opening the year with a strong rally across all key sectors, the Nigerian bourse has been on a steady decline in the past four months with the ASI’s year-to-date returns declining from a high of 17.91% in January to -3.73% as at last week Friday. The notable downtrend which saw stock prices retrace to recent lows has been attributed to an early onset of political jitters from highly cautious investors ahead of Nigeria’s elections next year. The bourse has however posted a slight recovery so far this week, recording green closes for two consecutive sessions, a first since the end of April. The ASI has returned 282bps wtd amidst a strong comeback by large cap stocks like ( DANGCEM ) and ( NB ). That said, analysts believe these gains are only a mild respite supported by bargain hunting across beaten down stocks, and thus believe bearish sentiment might resurface in the near term as election worries remain a front burner for investors. 

Mixed sentiment prevails in fixed income market 

In the absence of an OMO auction, the Interbank Call rate declined to 3.50% (previous: 3.92%).

Sentiment in the T-bills market persisted mixed in a largely quiet session, yields moderated a modest 5bps on average. In particular, whilst yields on the 37DTM (+20bps to 12.70%) and 219DTM (+33bps to 13.18%) bills advanced, yields on the 16DTM (-44bps to 12.09%) and 149DTM (- 22bps to 12.97%) bills declined. Similalry, sentiment in the bond space was varied as yields on benchmark bonds closed relatively flat on average (-1bp). In particular, yields on the 15.54% FGN FEB 2020 and 14.50% FGN JUL 2021 bonds declined 34bps and 15bps to settle at 12.52% and 13.27% respectively.

Analysts expect market to remain quiet today with mixed sentiment across both spaces, ahead of tomorrow’s OMO maturity and complementing liquidity mop-up as well.

NSE posts stronger recovery as ASI gains 246bps 

The Nigerian bourse closed well in the green yesterday, following positive performances in all but one key sector as bargain hunters swooped in across a host of stocks to lift the market. 

The Industrial Goods (+321bps) sector led gainers on the day following positive performances by ( WAPCO ) (+498bps) and ( DANGCEM ) (+224bps). Following closely, the Banking (+319bps) sector also closed up buoyed by advances in ( ZENITHBANK ) (+404bps), ( GUARANTY ) (+396bps) and ( UBA ) (+273bps). Likewise, the Consumer Goods (+270bps) sector closed in the green on the back of gains in ( INTBREW ) (+769bps), ( DANGSUGAR ) (+638bps) and ( NB ) (+500bps). Meanwhile, the Oil & Gas (-56bps) sector closed under after an uptick in ( ETERNA ) (+422bps) was overshadowed by a loss in ( TOTAL ) (-431bps). 

Market breadth turned positive with 42 advances and 15 declines. 

Market Outlook 

Market made a stronger statement in yesterday’s session with a markedly positive market breadth indicating the broad based recovery. Analysts believe the market is in for another bullish session today amidst the notable uptick in sentiment and as stock’s further pare huge prior losses. 

Stock Watch: 

ETERNA has gained 31% over the last six sessions. The stock currently trades at a price of N6.92 and has returned 70% YTD, compared to the Oil & Gas sector’s YTD return of 3%, making it the fourth best performing stock on the exchange. 

Corporate Disclosures 

Conoil Plc. announced that a Final Dividend of N2.00 per N0.50 ordinary share, subject to appropriate withholding tax and approval, will be paid to shareholders whose names appear in the Register of Members as at the close of business on the 14th of June, 2018. The Register of Shareholders will be closed from June 18, 2018 to June 22, 2018. 

Source: Analysts from Vetiva Capital Management Limited