CBN mops up liquidity; bears dominate 

27 July 2018 ( Lagos ) : The Central Bank of Nigeria conducted an OMO auction offering N400 billion and sold N349 billion across the 91DTM and 210DTM bills at respective stop rates of 11.05% and 12.15% (effective yields: 11.31% and 13.01%) lower than rates at the last auction. Amidst this, the interbank call rate advanced 26bps to 7.33%. 

Following this, the T-bills space exhibited a negative trading pattern, with yields advancing 15bps on average. Particularly, yields on the 35DTM (+68bps to 11.04%) and 161DTM (+53bps to 12.95%) bills advanced. Trading in the bond market was largely muted yet again, with a negative tilt. Like the previous session, yields rose 4bps on average across benchmark bonds, most notably, the 14.50% FGN JUL 2021 (+32bps to 13.86%), 14.20% FGN MAR 2024 (+10bps to 14.00%) and 13.98% FGN FEB 2028 (+13bps to 14.32%). 

Barring another liquidity mop-up today, analysts foresee a more mixed trading sentiment in the T-bills space with buying supported by expected coupon inflows. On the other hand, in the absence of any significant market catalysts analysts expect another slow session in the bonds space. 

ASI recovers mildly as Consumer Goods provide late boost 

The ASI closed modestly in the green thanks to light rebounds across all key sectors. Despite tepid trading throughout most of the session a late surge in NESTLE boosted the index to a +22bps close. 

The Banking sector (+77bps) was the day’s best performer, with ZENITHBANK (+194bps), GUARANTY (+52bps) and UBA (+158bps) all trading in the green. Meanwhile, the Consumer Goods sector (+19bps) recorded gains thanks to HONYFLOUR (+559bps) and a late surge from NESTLE (+352bps) which boosted the sector and ASI overall. The Industrial Goods (+17bps) and Oil & Gas sector (+12bps) also posted mild upticks thanks to CCNN (+595bps), MOBIL (+746bps) and OANDO (+208bps). 

Market breadth remained negative with 19 advances and 20 declines. 

Market Outlook 

With the release of positive results in the Oil and Gas sector, analysts foresee improved market sentiment and another marginally positive session today. Analysts will also likely see investors take up deflated blue chips at week close. 

Stock Watch

MOBIL released H1’18 results yesterday reporting a notable jump in revenue (53% y/y) and an even stronger increase in profit (120% y/y). The stock currently trades at N180.00, 8% down from its year high of N216.00 and below analyst's target price of N258.58. 

Corporate Disclosure 

The Board of Directors of NPF Microfinance Bank Plc has notified the Nigerian Stock Exchange that its annual general meeting held on Thursday, 28 June 2018 where three new directors were appointed to the board of the bank. The newly appointed directors are Mr. Abdulrahman Satumari, Mrs. Rakiya Edota Shehu, and Mr Salihu Argungu Hashimu. 

Reporting for EasyKobo on Friday, 27 July 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited