Bills and Equity, what happened yesterday?   

Healthy liquidity boosts short-end of T-Bills space 

06 November 2018 : With the CBN opting to hold off on OMO auctions at the start of the week, the Interbank Call rate declined 100bps to settle at 3.08%, whilst system liquidity came in at N692 billion. 

Meanwhile, the buoyant system liquidity boosted the T-bills market, with yields declining 30bps on average. Whilst buying was present across the space, the most significant activity was observed on the shorter end. Notably, yields on the 24DTM and 31DTM bills declined 150bps and 72bps respectively to settle at 8.54% and 11.42%. Meanwhile, activity was more mixed in the bond space, with benchmark yields advancing 3bps on average. Buying was observed at the shorter-end of the curve, with the yield on the 15.54% FGN FEB 2020 bond declining 18bps to settle at 14.44%. On the other hand, yields on the mid-to-longer dated bonds advanced. Particularly, yields on the 12.50% FGN MAR 2026 and 13.98% FGN MAR 2027 bonds advanced 12bps and 11bps respectively to settle at 15.64% and 15.59%. 

With market liquidity remaining healthy, and investors showing interest in shorter-dated bills, analysts foresee continued buy-side activity in the space. Meanwhile, analysts expect the bond space to remain mixed with a negative tilt as investors remain cautious. 

NSE ASI off to a tepid start as market activity dips 

With three of four key sectors moderating at the start of the week, the ASI fell 24bps yesterday even as activity levels remained low. 

Drilling down to sector performance, the Consumer Goods sector (- 58bps) was worst performer after losses in NB (-279bps) and UNILEVER (-595bps) outweighed gains in NESTLE (+147bps) and CADBURY (+10%). Meanwhile, the Industrial Goods (-49bps) and Banking (- 48bps) sectors also closed lower as a result of losses in WAPCO (- 57bps), CCNN (-938bps), ACCESS (-419bps) and ETI (-281bps). On the other hand, the Oil & Gas sector was the sole gainer, rising 82bps on the back of a solid gain in SEPLAT (+240bps). 

Market breadth remained negative with 16 advances and 25 declines. 

Market Outlook 

With weak investor sentiment continuing to affect market performance and activity, analysts foresee another mixed trading pattern today with a negative close the most likely outcome. 

Stock Watch: After shedding 281bps in yesterday’s session, ETI hit a year-low of N15.55, its lowest price since July 2017. The company recently released its 9M’18 results, reporting a 31% y/y increase in PAT (N58 billion). The stock trades at a 9% discount to its year-open price (N22.15). 

Reporting for EasyKobo on Tuesday , 06 November 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited

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