Bills and Equity- what happened yesterday?   

Improved system liquidity to boost demand 

19 October 2018 : Amidst a N347 billion OMO maturity, the CBN conducted an OMO auction yesterday, selling N275 billion (N350 billion offered) across the 105DTM, 182DTM and 329DTM bills at stop rates of 11.25%, 12.75% and 14.00% respectively (effective yields: 11.63%, 13.62%, 16.02% respectively) – higher than both the previous auction rates and current secondary market rates. System liquidity stood at c.N570 billion and the interbank call rate declined 936bps to 13.33%. 

As anticipated, trading was broadly bearish across the T-bills market as yields rose 17bps on average. In particular, yields on the 336DTM and 98DTM bills advanced 48bps and 46bps to settle at 15.61% and 13.11%. Despite this there was mild interest on select bills, with yield on the 168DTM bill declining 15bps to settle at 13.34%. However, trading in the bond space remained mixed, with benchmark yields staying flat on average. Notably, whilst yields on the 14.20% FGN MAR 2024 bond declined 1bp to settle at 15.09%, the 16.25% FGN APR 2037 bond advanced 1bp to settle at 15.16%. 

Whilst analysts still see room for yields in the secondary market to adjust to yesterday’s OMO levels, analysts expect the improved liquidity to spur some demand in the FI market. Thus, analysts anticipate a mixed trading session. 

Market rebounds as see-saw week continues 

The NSE ASI reversed course yesterday thanks to the Industrial Goods sector - the only key sector to gain on the day - driving the bourse 70bps higher. Market turnover remained above average (N3.8 billion) for the third straight day as Banks remained the toast of investors. 

As earlier mentioned, the Industrial Goods sector (+174bps) was the sole gainer thanks to a 300bps jump in DANGCEM and a mild uptick in CAP (+16bps). On the other hand, the Banking sector (-60bps) was the biggest loser, as declines in ACCESS (-250bps), UBA (-62bps) and GUARANTY (-54bps) outweighed ZENITHBANK (+45bps) the sole gainer. Finally, the Consumer Goods (-14bps) and Oil & Gas (-5bps) sectors recorded minor losses after DANGSUGAR (-200bps), FLOURMILL (-24bps) and ETERNA (-323bps) drove the negative activity. 

Market breadth remained negative with 13 advances and 22 declines. 

Market Outlook 

Market activity has fluctuated during the week with sentiment persisting mixed with no clear direction to trading. Therefore, analysts expect the market to close out the week mixed with a negative bias. 

Stock Watch: ZENITHBANK released its 9M’18 results yesterday, despite showing an 11% decline in gross earnings to N475 billion, the company recorded a 12% rise in Profit After Tax to N144 billion. The stock gained 45bps to settle at N22.55 but has lost 12%YTD. 

Corporate Disclosures 

The Board of Directors of Fidelity Bank Plc has notified the general public that the closed period on the company’s stock has commenced today 19 October 2018 and will be in effect until its unaudited accounts for the period are released. 

The Board of Directors of Ecobank Transnational Incorporated Plc has announced the co-option to its board of directors of Mrs. Aichatou Agne Pouye.

Reporting for EasyKobo on Friday ,19 October 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited

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