Tight system liquidity wears on fixed income market 

16 October 2018 : System liquidity stood at c.N100 billion at week open. With liquidity still tight, the interbank call rate rose from 19.17% to 39.92%. 

The fixed income market kicked off the week on a bearish note, with sell-offs concentrated at the long end of the curve. In the T-bills space, yields advanced a mere 1bp, with notable demand on the longer dated T-bills countered by selling across the short to mid-end. In particular, whilst the yield on the 322DTM bill declined 26bps to settle at 15.14%, the yield on the 31DTM bill advanced 28bps to settle at 13.35%. Trading was more bearish in the bond space as yields on benchmark bonds yields advanced 11bps on average. Notably, yields on the 12.50% FGN JAN 2026 and 16.25% FGN APR 2037 bonds advanced 17bps and 13bps to settle at 15.05% and 15.29% respectively. 

Analysts anticipate more bearish trading amid tight system liquidity. 

ASI sheds points following choppy session 

Amid sustained mixed trading on the Nigerian bourse, the NSE All-Share Index dipped 13bps at week open amid weak market activity and weighty losses from Industrials sector. 

As previously mentioned, the Industrial Goods sector (-190bps) was biggest loser, following sharp selloffs in WAPCO (-652bps). The Consumer Goods sector (-73bps) also dropped points on the back of losses in NB (-227bps) and UNILEVER (-529bps). Meanwhile, the Banking (+72bps) and Oil and Gas (+92bps) sectors closed in positive territory on the back of upticks in GUARANTY (+110bps), UBA (+62bps), ACCESS (+63bps), FO (+988bps) and OANDO (+297bps). 

Market breadth turned negative with 17 advances and 18 declines. 

Market Outlook 

Investor sentiment remains subdued amidst persistently low market turnover and mixed trading patterns. Analysts expect trading in today’s session to maintain a mildly bearish tilt. 

Stock Watch: After shedding 10% in the last 12 sessions, HONYFLOUR closed at a year-low of N1.26 in yesterday’s session. This represents a 40% YTD loss for the stock and its lowest price since April 2017. 

Corporate Disclosures

• The Board of Directors of Cement Company of Northern Nigeria Plc has announced that it has received the requisite pre-merger approvals from the Securities and Exchange Commission and the Nigerian Stock Exchange for its proposed merger with Kalambina Cement Company Limited. 

• The Board of Directors of Prestige Assurance Plc has notified the Nigerian Stock Exchange and interested parties that the board will be meeting on 29 October 2018 to consider the unaudited financial statements for the period ended 30 September. 

• The Board of Directors of Red Star Express Plc has notified the Nigerian Stock Exchange, shareholders and other stakeholders that the company has opened an office in Benin Republic -Red Star Express Benin. 

• The Board of Directors of African Alliance Plc has notified the Nigerian Stock Exchange. Shareholders and the general public that the company has relocated its head office to No. 54 Awolowo Road, Ikoyi, Lagos.

The Board of Directors of MRS Oil Nigeria Plc has notified the Nigerian Stock Exchange of the scheduling of its meeting for Wednesday 24 October 2018 to consider the company’s financial statements for the period ended 30 September 2018. Accordingly, the board has announced that the close period for its stock will commence on 9 October 2018. 

Reporting for EasyKobo on Tuesday ,16 October 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited