Financial Market Update   

11 July 2018 ( Lagos )

Yields moderate at a slower pace than previous session 

With the CBN maintaining its loose liquidity stance, the Interbank Call rate declined 683bps to 14.00%. 

Trading observed in the T-bills space was varied with a positive tilt, with yields declining 3bps on average. Specifically, while yields on the 65DTM (+46bps to 12.15%) and 177DTM (+18bps to 13.06%) bills advanced, yields on the 37DTM (-23bps to 11.64%) and 219DTM (-52bps to 12.68%) bills declined. Similarly, yields on benchmark bonds closed flat yesterday, declining a meagre 1bp on average with demand spread evenly across most tenors. Particularly, while yields on the 16.00% FGN JUN 2019 and 16.39% FGN JAN 2022 bonds both shed 5bps to settle at 13.06% and 13.75% respectively, yields on the 12.40% FGN MAR 2036 bond advanced 11bps to settle at 14.24%. 

In the absence of an OMO mop up and fresh supply from offshore traders, analysts expect demand to persist in the fixed income space. 

Bears return to Nigerian bourse 

The Nigerian equity market shed 60bps after losses in large cap stocks weighed on the exchange, with all key sectors closing in the red. 

The Industrial Goods (-223bps) sector posted the weakest performance yesterday, led by a loss in WAPCO (-592bps) which eclipsed a positive performance by CCNN (+44bps). Likewise, the Banking (-115bps) and Oil & Gas (-110bps) sectors both closed under, on the back of declines in GUARANTY (-337bps), ZENITHBANK (-41bps), TOTAL (-476bps) and SEPLAT (-231bps), and despite green closes in ETI (+98bps) and FO (+994bps). Lastly, the Consumer Goods (-18bps) sector shed points as declines in DANGSUGAR (-169bps) and NB (-99bps) erased a gain in UNILEVER (+29bps). 

Market breadth remained negative with 12 advances and 28 declines. 

Market Outlook 

Bearish sentiment became more pronounced in yesterday’s session, evidenced by red closes across all key sectors and increasingly negative market breadth. Analysts expect the negative trading pattern to be sustained in today’s session. 

Stock Watch

DANGSUGAR shed 8% in the last six sessions. The stock currently trades at a price of N17.50 (below analyst's target price of N23.30) and has declined 13% YTD compared to the Consumer Goods sector’s 9% decline YTD. 

Corporate Disclosures

The Board of Directors of Julius Berger Nigeria Plc has given notice of its statutory audit committee and board audit committee meeting to be held on Wednesday, 25 July 2018 to consider the results for the second quarter ended 30 June 2018. It also notified the Nigerian Stock exchange that from 12 July to 27 July 2018 there will be a closed period. 

Reporting for EasyKobo on Wednesday, 11 July 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited

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