Bills and Equity, what happened yesterday?   

Investors’ sentiment mixed at the start of the week 

23 October 2018 : Despite the absence of a liquidity mop-up, system liquidity declined to c.N80 billion at week open. Amidst this, the interbank call rate advanced 733bps to 20.00%. 

Sentiment in the fixed income market was mixed yesterday albeit with a slightly positive tilt. Yields across the T-bills market declined 10bps on average with a handful of advances on select bills. Whilst the yields on the 17DTM and 164DTM bills declined 66bps and 54bps to settle at 12.30% and 13.05%, yield on the 115DTM bill advanced 70bps to settle at 13.49%. Meanwhile, in the bonds space, benchmark yields declined 1bp on average. Whilst yield on the 14.50% FGN JUL 2021 bond declined 15bps to settle at 15.01%, yield on the 16.25% FGN APR 2037 bond advanced 7bps to settle at 15.21%. 

On the back of tightened system liquidity, analysts expect the CBN to refrain from mopping up. Despite this, analysts foresee another mixed trading session. 

Trading off to a positive start as earnings boost activity 

Despite a steep decline in one of the key sectors, the ASI started off the week on a positive note thanks to gains in three of the four key sectors boosting the market to a +37bps close. 

The Oil and Gas sector (+293bps) was the big winner on the day, after SEPLAT (+486bps), OANDO (+288bps) and FO (+174bps) boosted the sector. Meanwhile, the Banking (+47bps) and Consumer Goods (+39bps) sectors also inched up thanks primarily to heavyweights ZENITHBANK (+480bps) and UNILEVER (+820bps) which outweighed losses in ACCESS (-361bps), GUARANTY (-82bps) and NB (-68bps). Finally, the Industrial Goods sector was the sole loser, shedding 268bps as WAPCO (-10%) dragged the sector. 

Market breadth turned positive with 19 advances and 17 declines. 

Market Outlook 

With earnings season near full swing, market activity is likely to remain elevated for the remainder of the month, while investor sentiment will be determined by results. With that, analysts expect market performance to be mixed-to-positive today. 

Stock Watch: DANGCEM released its 9M’18 results yesterday, showing a 14% increase in revenues to N685 billion and 3% rise in Profit After Tax to N158 billion (Vetiva: N148 billion). The stock remained at N210 and is trading at an 8% YTD loss. 

Corporate Disclosures 

The Board of Directors of Royal Exchange Plc has notified the general public of the exit of the Group Managing Director, Alhaji Auwala Muktari with effect from 19 October 2018 and the approval of Mr Olawale Banmore, in addition to his role as the Managing Director of Royal Exchange Prudent Life, as interim until a substantive Group Managing Director. 

Reporting for EasyKobo on Tuesday ,23 October 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited

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