T-bills and Bond space

In the absence of a liquidity mop-up by the CBN, the interbank call rate declined 557bps to 9.43%. 

Meanwhile, buying was evident in the T-bills space, with yields declining 8bps on average yesterday, supported by modest system liquidity (N141 billion). Notably, whilst yields on the 17DTM (-51bps to 10.27%) and 122DTM (-56bps to 11.18%) bills declined, yields on the 101DTM (+39bps to 11.71%) and 360DTM (+67bps to 13.08%) bills advanced. In contrast, trading in the bond space was mixed with a negative tilt, with yields on benchmark bonds advancing 3bps on average. Particularly, while yield on the 16.00% FGN JUN 2019 bond advanced 58bps to settle at 13.05%, yield on the 16.39% FGN JAN 2022 bond declined 21bps to settle at 13.53%. 

Ahead of the MPC decision on policy rates today, analysts expect trading in the bonds space to remain tepid. Meanwhile, they expect to see continued demand in the T-bills space as system liquidity remains buoyant – barring any OMO auction. 

Equity

Market closes positive on improved sentiment 

The market got off to a positive start this week, with the ASI closing 30bps up, driven by bargain hunting on stocks that dipped last week – mostly across the Banking and Industrial Goods sectors. 

The Oil and Gas sector (-166bps) was the sole loser on the day, with heavyweights, FO (-968bps), OANDO (-721bps) and ETERNA (-231bps) all shedding points. However, the Banking sector (+63bps) stayed in the green, following upticks in GUARANTY (+211bps) and ZENITHBANK (+22bs). The industrial Goods sector (+37bps) also posted gains after upticks in DANGCEM (+55bps) and CCNN (+442bps) boosted the sector. Meanwhile, the Consumer Goods sector (+10bps) closed with mild gains as FLOURMILL (+101bps), NB (+47bps) and NASCON (+272bps) outweighed losses in INTBREW (-107bps) and DANGFLOUR (-220bps). 

Market breadth turned positive with 20 advances and 18 declines. 

Market Outlook 

Whilst analysts cheer the emergence of bargain hunting, they note that trading sentiment is still relatively weak as evidenced by the low volume and value traded. Thus, they expect a tepid trading session today, albeit with a positive tilt. 

Stock Watch

WAPCO released their H1’18 yesterday, with bottom-line coming 120% lower y/y. The cement company currently trades at N32.5, 28% down ytd and 30% below its year-high of N46.6. 

Corporate Disclosures 

The Board of Directors of Ecobank Transnational Incorporated has announced the appointment of Patrick Akinwuntan as the managing director & regional executive – designate of Ecobank Nigeria, subject to applicable regulatory approvals. 

The Board of Directors of Rak Unity Petrolium Company Plc has given notice of its annual general meeting to be held on Thursday, 16 August. The board will table the company’s audited accounts and elect new members of the audit committee. 

Reporting for EasyKobo on Tuesday, 24 July 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited