Rates continue to rise amidst sustained sell pressure 

14 September 2018 : Following an OMO repayment of N268 billion, market liquidity rose to N384 billion. However, in spite of the inflow, the Interbank call rate advanced 200bps to 10.33%. 

• Meanwhile, the yield curve continued to flatten as sentiment remained poor across both segments of the secondary market, with yields especially advancing at the short end of the curve. Specifically, yields on T-bills advanced 74bps, with pressure concentrated largely at the short end of the space – yields on the 28DTM and 35DTM bills notably advanced 153bps and 146bps to settle at 14.85% and 14.81% respectively. Similarly, the short-end of the bond space was heaviest hit, driving an eventual 13bps rise on average benchmark bonds yields. In particular, the yield on the 15.54% FGN FEB 2020 bond advanced 56bps to settle at 15.22%. 

• Amidst a sustained lack of buy-side interest from investors, analysts anticipate further advances in the T-bills space and a mixed to negative close to trading in the bond market at week close. 

ASI closes in the red for seventh straight session 

• The NSE ASI continued to trend southwards for the seventh consecutive session, down 84bps in yesterday’s session on account of sustained sell-offs in the Consumer and Industrial Goods sectors. 

• In a seeming replica of the prior trading session, the Industrial Goods sector shed -334bps yesterday following a 10% slump in WAPCO shares. Meanwhile, the Consumer Goods (-231bps) and Oil & Gas (- 72bps) sectors also shed points no thanks to moderation in NESTLE (- 548bps), FO (-741bsp) and CONOIL (-988bps). Finally, selling cooled in the Banking sector as bargain hunting in UBA (+142bps) and GUARANTY (+107bps) supported a flat close for the sector despite losses in ZENITHBANK (-51bps) and ACCESS (-500bps). 

• Market breadth remained negative with 9 advances and 28 declines. 

Market Outlook 

Whilst some bargain hunting appears to have softened losses on the exchange, analysts still expect the week to close off in negative territory as bears maintain the upper hand across board.

Stock Watch: Major blue-chips on the stock exchange are now trading at multi-year lows, with the second largest stock in the Industrial Goods sector WAPCO closing at a 9-year low of N20.70 in yesterday’s session following a 10% d/d decline. Having shed 54% of its value ytd, WAPCO is the worst performing stock in the sector. 

Reporting for EasyKobo on Friday , 14 September 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited