Fixed Income : Bearish trading persists amid PMA undersale 

16 August 2018 : At the August bond auction, the DMO offered N90 billion across the 5- year, 7-year and 10-year tenors, eventualling selling N40 billion at respective stop rates of 14.39%, 14.60% and 14.69%. Likewise, the CBN offered and sold N33 billion across the 91, 182 and 364 DTM T-bills at respective stop rates of 10.00%, 10.40% and 11.22% (previous: 10.00%, 10.40% and 11.30%). Amid this, Interbank call rate declined 88bps to 9.50%. 

Trading in the T-bills space was mixed yesterday (-4bps), with buying weighted on the short-dated bills. Notably, yield on the 29DTM bill declined 83bps to settle at 10.32%. However, sentiment in the bond space was more tepid as yields rose 5bps on average. Sell pressure was evident across the curve as yields on the 13.98% FGN FEB 2028 and 12.40% FGN MAR 2036 bonds rose 16bps and 11bps to 14.83% and 14.77% respectively. 

Amid a N440 billion maturity, analysts anticipate a liquidity mop up, which would dampen buying sentiment. Moreover, analysts expect more bearish activity in the bond space given the weak demand seen at the auction. However, analysts note the oversubscription (174%) and undersale (53%) on the 10-year bond and foresee healthy demand on this instrument. 

Equity : Market suffers ninth-straight session of losses 

The Nigerian bourse remained on a downward trend yesterday, with the ASI down 60bps following red closes across all key sectors. 

The Consumer Goods (-147bps) sector reversed minor gains recorded in the previous session to record the largest loss on the day as NESTLE (-385bps) and DANGFLOUR (-500bps) dragged the sector. Meanwhile, the Banking (-103bps) and Oil & Gas (-76bps) sectors continued to shed points amidst sizable losses in ZENITHBANK (-213bps), UBA (-220bps) and OANDO (-900bps). The Industrial Goods sector closed nearly flat, as small-cap BERGER (-972bps) was the only mover in the sector. 

Market breadth remained negative with 13 advances and 30 declines. 

Market Outlook 

Analysts expect the ASI to extend the bearish streak to a tenth consecutive session today given the evidently negative sentiment prevalent across board. 

Stock Watch: OANDO has been on a notable downtrend in recent sessions. The stock has lost 20% in the last eleven sessions, wiping out gains recorded post release of its H1’18 results. After touching a year high of N9.60, the stock currently trades at N4.55 and has lost 24% ytd, behind the Oil & Gas Sector Index ytd loss of 11%. 

Corporate Disclosure

The Board of Directors of Academy Press Plc has notified the Nigerian Stock Exchange that the company’s 54th annual general meeting will be held at the registered office of the company on Thursday 27 September 2018. 

The Board of Directors of Multiverse Mining Plc has notified the Nigerian Stock Exchange that the Mr. Mamman Bukar Zargana was appointed a Non-Executive director of the company at the board’s meeting on 10 July 2018. The appointment is effective from 1 August 2018. 

The Board of Directors of Fortis Microfinance Bank Plc has informed shareholders and the general public of the resignation of Mrs. Bunmi Lawson as the Interim Managing Director of the company effective Friday, 3 August 2018. 

The Board and Management of Resort Savings and Loans Plc has notified the Nigerian Stock Exchange that the bank has delayed the release of its financial statements for the years 2015 to 2017. This is as a result of the bank’s efforts at recapitalization which has led the bank to audit its financial statements for the aforementioned years. 

Reporting for EasyKobo on Thursday ,16 August 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited