03 July 2018 ( Lagos ) :

Mixed sentiment filters into the new week 

In spite of a continued pause in OMO auctions and the consequent improvement in system liquidity, Interbank Call rate advanced to 30.00% yesterday (previous: 13.17%). 

Meanwhile, trading momentum in the T-bills space remained mixed with a bullish tilt, with yields declining 11bps on average. Notably, yields on the 31DTM (-62bps to 12.25%), 94DTM (-34bps to 12.44%) and 276DTM (-31bps to 13.59%) bills declined. In contrast, trading in the bond space was largely muted, with sell pressure observed across tenors. Yields on benchmark bonds advanced 9bps on average. Notably, yields on the 15.54% FGN FEB 2020 and 16.2884% FGN MAR 2027 bonds rose 102bps and 31bps to settle at 13.35% and 14.11% respectively. 

Barring external shocks, analysts expect quiet trading in the bond space with bargain hunters picking offers at attractive levels. Meanwhile, analysts expect trading in the T-bills space to remain mixed with a positive tilt in today’s session in the absence of an OMO auction. 

Selloffs across large caps swing ASI to negative week open 

Driven by losses across large caps, The NSE ASI (-87bps) retreated at week open, with sell pressure weighted on Industrial Goods and select banking names. 

After a brief respite at last week’s close, the Industrial Goods (-104bps) and Banking (-102bps) sectors swung back into the red, dragged by declines in DANGCEM (-214bps), UBN (-164bps), ZENITHBANK (- 160bps) and GUARANTY (-123bps). Also, the Consumer Goods sector (-11bps) closed marginally in the red, after dips in HONYFLOUR (- 961bps) and NB (-96bps) outweighed advances in GUINNESS (+133bps) and DANGFLOUR (+100bps). However, the Oil & Gas sector went against the grain, rising 77bps after a 923bps uptick in MOBIL erased losses in FO (-974bps) and ETERNA (-45bps). 

Market breadth turned negative with 15 advances and 22 declines. 

Market Outlook 

Analysts expect weak investor sentiment to keep stock prices under pressure. 

Stock Watch

FLOURMILL released its FY’18 results today, reporting a bottom line of ?14 billion (26% behind analyst's estimates and 54% up y/y). The stock currently trades at a price of ?32.80 and has returned 13% YTD. 

Corporate Disclosures 

The Board of Directors of United Bank for Africa have given notice of the commencement of the closed period of the bank with effect from Tuesday, July 3, 2018 up until the release of the bank’s audited half year financial statements, following the auditing and approval of te Central Bank of Nigeria, the results will be released before August 29, 2018. 

The Board of Directors of Diamond Bank Plc. have announced the appointment of Mr. Oluseyi Bickersteth as an independent non-executive director/chairman of the board of directors effective June 26, 2018. They also announced the scheduling of a board meeting to hold on Thursday July 19, 2018. The board also approved the bank’s unaudited financial statements for the second quarter ended June 30, 2018. They announced the close of the period from July 4, 2018 until the statement is released on the floor of the Nigerian Stock Exchange. 

Source: Vetiva Capital Management Limited.

Reporting for EasyKobo on Tuesday, 3 July 2018 in Lagos, Nigeria