30 July 2018 ( Lagos ) 

EQUITY

ASI marks first positive w/w close in four weeks

The Nigerian Equity market drew to a positive close, finishing 58bps higher on Friday majorly supported by Oil & Gas stocks. The All-Share Index however recorded a modest 9bps w/w rise amidst notable losses recorded at mid-week. The Banking sector (+78bps; +197bps w/w) had the strongest performance amongst key sectors with GUARANTY (+154bps) and FCMB (+355bps) boosting the sector. 

The Consumer Goods sector also recorded a positive close to the week (+105bps), thanks to advances in DANGSUGAR (+10.00%) and DANGFLOUR (+970bps). However, stronger losses early in the week led the sector -19bps lower w/w. Meanwhile, the Industrial Goods (+43bps d/d; -440bps w/w) and Oil & Gas (-76bps d/d; -374bps w/w) sectors were the worst performing counters this week, following weighty losses in WAPCO (-15.38% w/w) and OANDO (-5.41% w/w) respectively. 

Though the market managed a positive performance at week close, analysts believe the outcome of earnings releases will remain the major determinant of market direction in the coming week. That said, analysts foresee a mildly positive start to the week, noting the widely positive market breath at week close. 

Stock Watch

FCMB released its H1’18 results on Friday. The company recorded an 8% y/y rise in Gross earnings, in line with Analyst's estimate, and a 90% y/y increase in PAT, 19% below Analyst's estimates. The stock gained 355bps on Friday to settle at N2.04 – a 38% ytd return. 

BILLS

Sizeable OMO mop-ups keeps sentiment downbeat 

Trading pattern remained negative across the T-bills market at week close noting the total N585 billion liquidity mopped up through OMO auctions during the week. In particular, yields on the 48DTM and 118DTM bills rose 100bps and 25bps respectively to 12.28% and 11.50%. 

Similarly, trading was bearish across the bonds space, with average yields on benchmark notes rising 3bps d/d. Notably, the yield on the 15.54% FGN FEB 2020 and 16.2499% FGN APR 2027 bonds rose 78bps and 6bps to 13.73% and 14.22% respectively. Overall, yields rose 3bps across the T-bills market w/w and rose 5bps on average across benchmark bonds w/w. 

Whilst analysts expect the tightened liquidity to keep yields elevated across the fixed income market at week open, analysts highlight a potential demand boost from asset managers, driven by a Commercial Paper maturity from FLOURMILL due on Tuesday. 

CURRENCY

The CBN continued its regular interventions in the currency market this past week, through a spate of spot and forward currency sales. Notably, the apex bank sold $210 million on Thursday, across various windows in the market. Meanwhile, the naira depreciated N0.68 w/w at the I&E FX Window to close at N362.28 against the dollar while remaining stable throughout the week at N358.50 in the parallel market. 

Analysts expect the naira to remain stable across the various windows of the currency space as the CBN continues to intervene in the FX market. 

Reporting for EasyKobo on Monday, 30 July 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited