Bills and Equity- what happened last week ?   

Bargain hunting lifts ASI to positive w/w close 

24 September 2018 : Investors capitalized on beaten down stocks to take the bourse to an 18bps close today, capping off a mildly positive week as the index rose 66bps w/w – first positive w/w close in five weeks. The Banking sector (+267bps w/w) was the best performer this week amid consistent buying interest in ZENITHBANK (w/w: +374bps), ACCESS (w/w: +449bps) and UBA (d/d: +256bps; w/w: +811bps). Whilst the Industrial Goods sector moderated 43bps d/d, the sector rose 243bps w/w as a notable recovery in WAPCO (+13.5% w/w) offset selling pressure on DANGCEM (-238bps w/w). Similarly, the Oil & Gas (+260bps w/w) recorded a positive performance following a sizable rebound in FO (-23% w/w). Despite trading in negative territory for most of the week, the Consumer Goods sector finished 96bps higher w/w after buying in NB (+449bps d/d) and NESTLE (+141bps d/d) at week close supported a 200bps d/d uptick for the sector. 

The week was dominated by investor interest in down-trodden stocks, with the Banking sector seeing the most activity. Analysts foresee a continuation of this at week open, with the gains fizzling out as the week progresses amid still weak investor sentiment. 

Stock Watch: After gaining 16% w/w to close at N5.80, UBN was the best performing banking stock this week. The stock has lost 26% ytd and is 34% below its year-high price of N8.78. 

Healthy liquidity steers market to a positive week 

The CBN mopped up N388 billion in an OMO auction during the week amid maturities of N182 billion. Despite this, system liquidity remained buoyant at N518 billion and the interbank call rate declined 17bps to 4.00% at week close. 

Trading across the fixed income market was bullish over the course of the week. Yields in the T-bills market declined 18bps on Friday (-151bps w/w) with notable declines on the 20DTM (-90bps to 8.38%) and 62DTM (-42bps to 12.29%) bills. Trading in the bond space was likewise positive, with demand concentrated on short to mid-term maturities amid a 7bps yield decline across benchmark bonds (-24bps w/w). In particular, yields on the 15.54% FGN FEB 2020 and 16.39% FGN JAN 2022 bonds moderated 27bps and 42bps to settle at 14.27% and 14.69% respectively. 

Analysts expect persistent buoyant liquidity to support buying in the T-bills market at week open. However, analysts anticipate more cautious trading on bonds ahead of the Central Bank of Nigeria Monetary Policy meeting (Monday & Tuesday) and the September Bond Auction (Wednesday). 

The CBN continued its intervention in the Foreign Currency market this week, injecting $210 million at the inter-bank foreign exchange on Tuesday. The naira depreciated N0.50 w/w at the I&E FX Window to settle at N363.68 against the dollar while remaining flat at N359.50 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. 

Corporate Disclosures 

The Board of Directors of Berger Paints Nigeria Plc has notified the Nigerian Stock Exchange and shareholders that it has approved the appointment of Mr Ayokunle Ayoko as Company Secretary/Legal Adviser effective 17 September 2018. 

Source: Vetiva Capital Management Limited

Reporting for EasyKobo on Monday , 24 September 2018 in Lagos, Nigeria

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