Fixed Income : Tepid trading persists despite buoyant liquidity 

17 August 2018 : At its OMO auction, the CBN offered N450 billion and sold N154 billion across the 91DTM and 203DTM bills at respective stop rates of 11.0% and 12.1%. Amid this, interbank call rate declined 167bps to 7.83% with system liquidity imporving to N492 billion. 

Despite healthy system liquidity, trading in the T-bills space turned tepid as yields advanced 2bps on average. In particular, yields on the 28DTM and 336DTM bills advanced 71bps and 44bps to settle at 11.03% and 13.42% respectively. Sentiment in the bond space likewise was tepid as yields on benchmark bonds rose 5bps on average. Sell pressure was concentrated on shorter-dated bonds as yields on the 16% FGN JUN 2019 and 14.50% FGN JUL 2021 bonds rose 33bps and 42bps to 13.20% and 14.45% respectively. 

Despite healthy liquidity, demand remains weak, evidenced by low sales at recent primary market and OMO auctions, as well as sell offs in the secondary market. Analysts expect further tepid trading at week close. 

Equity : ASI extends losing streak amid sharp decline in Industrials 

Led by notable losses in the Industrial Goods sector, the NSE ASI extended its losing streak to ten in a row in yesterday’s session, down -129bps d/d and with ytd losses only slightly off the 10% mark. 

The Industrial Goods sector was the biggest loser as it recorded a 211bps decline following sharp selloffs in DANGCEM (-374bps). Meanwhile, the Banking (-81bps) and Consumer Goods (-6bps) sectors also closed lower as losses in UBA (-618bps), ACCESS (-52bps) and NASCON (-148bps) dragged the sectors. Recording the sole positive close on the day, the Oil and Gas (+48bps) sector finished in the green following a noteworthy reversal in OANDO (+879bps). 

Market breadth remained negative with 17 advances and 29 declines. 

Market Outlook 

With the market showing no signs of recovery and sentiment remaining bearish, analysts foresee another negative session for the market today even as investors remain skittish. 

Stock Watch: STANBIC released its H1’18 results yesterday, the company saw a 17% increase in revenue and a remarkable 79% increase in PAT, 17% above Vetiva estimate. The stock is currently trading at N50, a ytd return of 20%, well above the industry average (–8%). 

Corporate Disclosures

The Board of Directors of Diamond Bank Plc has announced the appointment of Mr. Idris Mohammed as a non-executive Director with the approval of the Central Bank of Nigeria. 

The Board of Direcors of Dangote Cement Plc has announced the proposed issuance of N50 Billion series 3 and 4 notes under its N150 billion Commercial Paper Programme announced on 27 June 2018. Funds raised in the Commercial Paper programme will be used for capital expenditure, working capital and general corporate purposes. 

The Board of Directors of FCMB Group Plc notified the Nigerian Stock Exchange that the group’s commercial banking subsidiary, First City Monument Bank Limited, confirmed that there were attempted fraudulent card transactions on a few customer’s accounts which had a lien placed on said accounts to minimize potential losses. The bank has assured its customers that they will not suffer financial loss and has started making refunds on the affected accounts. 

Reporting for EasyKobo on Friday ,17 August 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited