OMO stop rates point towards higher yields 

21 September 2018 :Yesterday, the CBN conducted its first OMO auction since last Monday, mopping up N338 billion (N550 billion offered). The apex bank sold the 182DTM and 364DTM bills at respective stop rates of 12.50% and 13.50%, higher than rates at the most recent PMA and OMO auctions – with no sale on the 91DTM. Despite this, the Interbank call rate declined 58bps to 4.17%, whilst system liquidity moderated to N677 billion. 

• Trading across the Fixed Income market was positive yesterday with demand supported by healthy system liquidity. Buying was most prominent in the T-bills space with yields declining 26bps on average. Notably, yields declined across short, mid and long tenored bills – yields on the 21DTM, 105DTM and 315DTM moderating 34bpd, 61bps, and 47bps to settle at 9.27%, 13.16%, and 15.20% respectively. Meanwhile, although yields on benchmark bonds declined 4bps on average, activity was mixed across tenors. Whilst yield on the 14.20% FGN MAR 2024 bond declined 10bps to close at 15.05%, yield on the 16.39 FGN JAN 2022 advanced 3bps to settle at 15.11%. 

• Although market sentiment has been fairly positive as healthy system liquidity has boosted demand for short-term instruments in particular, analysts note the increase in stop rates at yesterday’s OMO auction and expect yields in the secondary market to adjust upwards to OMO levels. 

Late bargain hunting boosts market 

• After another mixed trading session, the Nigerian equity market closed 33bps higher following a late bargain-hunting spree on large-caps across three of the four key sectors. 

• The Industrial Goods sector was the big winner, climbing 244bps after a jump in downtrodden WAPCO (+9.90bps) outweighed losses in CCNN (-444bps). The Banking and Consumer Goods sectors also advanced, inching up 66bps and 16bps respectively thanks to upticks in ACCESS (+63bps), UBA (+400bps), ETI (+278bps), GUINNESS (+233bps) FLOURMILLS (+415bps) and DANGSUGAR (+463bps). However, the Oil and Gas sector retreated yesterday, moderating 29bps after heavyweight, SEPLAT (-110bps) shed points. 

Market breadth remained positive with 25 advances and 15 declines. 

Market Outlook 

Whilst intraday trading remains tepid, analysts note increased investor appetite for under-valued stocks in recent sessions – evidenced by more frequent bargain-hunting. Thus, analysts anticipate a mixed close to the week with a positive tilt. 

Stock Watch: SEPLAT fell 110bps to settle at a year-low yesterday, it’s lowest price since December 2017. The stock has lost 4% of its value ytd, outperforming the Oil and Gas sector (-13%) and currently trades at N600.00. 

Corporate Disclosures 

The Board of Directors of Ekocorp Plc has informed the Nigerian Stock Exchange, shareholders and the general public of the appointment of Mr Uzochukwu Eneli to the board of directors of the company. 

The Board of Directors of RT Briscoe Plc has notified the Nigerian Stock Exchange that the board will meet on 16 October 2018 to consider the unaudited results of the companyfor the third quarter ended 30 September 2018. The closed period for all directors, and other persons connected to the company is from 1 October to 25 October 2018. 

Reporting for EasyKobo on Friday , 21 September 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited