Positive sentiment dominates despite liquidity mop-up 

25 July 2018 ( Lagos ) : The CBN conducted an OMO auction yesterday offering N350 billion and selling N236 billion on the 86DTM and 205DTM bills at respective stop rates of 11.05% and 12.15% (effective yields: 11.35% and 13.04%). Despite this, the interbank call rate declined to 7.17% (previous: 9.43%). 

Demand was pronounced in the T-bills space ahead of the conclusion of the MPC’s two-day meeting, with yields moderating 18bps on average yesterday. Specifically, yields on the 51DTM (-95bps to 11.02%), 100DTM (-74bps to 10.97%) and 240DTM (-70bps to 12.93%) bills declined. Similarly, sentiment in the bond space was largely positive with buying weighted towards the shorter dates tenors. Yields on benchmark bonds dropped 8bps on average. Notably, yields on the 16.00% FGN JUN 2019, 15.54% FGN FEB 2020 and 12.40% FGN MAR 2036 bonds declined 39bps, 65bps and 6bps to settle at 12.66%, 12.96% and 14.17% respectively. 

System liquidity remains healthy (N573 billion) despite the OMO auction on the back of FAAC inflows and as such analysts expect continued buying in the T-bills space today. Whilst the MPC’s decision to keep all monetary policy levers unchanged was in line with market expectation, analysts foresee cautious trading in the Bonds space ahead of the Bonds PMA today where the DMO will be offering N90 billion on the 5-yr, 7-yr and 10-yr bonds. 

Bears return as Industrials weighs on market 

The market returned to the red (ASI: -70bps) as traders sold off on blue chips across key sectors, particularly the Industial Goods’ DANGCEM and WAPCO. 

The Industrial Goods sector (-388bps) was the worst hit on the day, following losses in WAPCO (-10.00%) and DANGCEM (-41bps). Also, the Consumer Goods sector (-69bps) shed points, as declines in NB (-231bps) and DANGSUGAR (-395bps) dragged the sector. The Oil and Gas sector (-45bps) also finished lower as a result of losses in OANDO (-291bps) and ETERNA (-551bps). Finally, the Banking sector (-32bps) also closed in negative territory as dips in UBA (-266bps) and FIDELITY (-947bps) outweighed gains in GUARANTY (+26bps) and ZENITHBANK (+22bps). 

Market breadth turned negative with 16 advances and 33 declines. 

Market Outlook 

With unimpressive earning from select stocks further exacerbating the weak market sentiment, analysts foresee another negative close in today’s session even as more corporate results are released. 

Stock Watch: WEMABANK has gained 19% in the last five sessions to settle at N0.75. The bank is an outperformer across the banking sector with ytd returns of +44% vs. 14.80% average for lower Tier peers. 

Corporate Disclosures

The Board of Directors of Lafarge Africa Plc has notified the Nigerian Stock Exchange of the resignation of Non-Executive Director, Mr. Jean-Carlos Angulo effective 20 July 2018. The Board also announced the appointment of Mr. Rossen Papazov as Non-Executive Director effective 21 July 2018. 

The Board of Directors of Stanbic IBTC Holdings Plc has notified the Nigerian Stock Exchange of the resignation of Mr. Ratan Mahtani as Non-Executive Director of the board with effect from 29 July 2018. 

The Board of Directors of Veritas Kapital Assurance Plc has notified the Nigerian Stock Exchange, shareholders and the general public of the appointment of Saratu Umar Garba as the substantive company secretary of Veritas Kapital Assurance. 

Reporting for EasyKobo on Wednesday, 25 July 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited