Trading turns bearish amid tight liquidity 

08 November 2018 : With the CBN holding off on conducting an open market operation, system liquidity stabilized at N170 billion and the Interbank Call rate declined 100bps to settle at 8.83%. 

Meanwhile, trading persisted bearish in the T-bills space with yields advancing 16bps on average. Selling was observed across the space, with yields on the 57DTM, 64DTM and 120DTM bills advancing 49bps, 49bps and 42bps respectively to 12.89%, 13.15% and 13.37%. On the other hand, the bond space was mixed with a positive tilt, with buying observed on the mid-end of the space. Notably, yields on the 14.50% FGN JUL 2021 and 16.39% FGN JAN 2022 bonds declined 19bps and 7bps respectively to settle at 15.23% and 15.08%. 

With market liquidity likely to strengthen after a N307 billion OMO maturity today, analysts expect the CBN to conduct an OMO auction. Therefore, analysts expect muted demand in the T-bills market. Meanwhile, analysts foresee further mixed trading activity in the bond space, as investment sentiment remains tepid. 

Market returns to negative territory after Industrials sell-off 

Yesterday, the NSE ASI moderated 14bps, driven by losses in three of the four key sectors. Meanwhile, market activity was unusually high at N9.4 billion (the highest since August), as a result of a large trade in ZENITHBANK. 

• Looking at key sector performance, the Banking sector (+19bps) was the sole gainer, after advances in UBA (+256bps) and ZENITHBANK (+63bps) edged out a 67bps fall in GUARANTY. Meanwhile, the Industrial Goods sector (-234bps) was the biggest loser, after a heavy loss in WAPCO (-977bps) dragged the sector. Finally, the Consumer Goods and Oil & Gas sectors moderated 9bps and 16bps respectively on the back of losses in DANGSUGAR (-335bps) and SEPLAT (-31bps). 

Market breadth turned positive with 18 advances and 17 declines. 

Market Outlook 

Despite the increase in market activity, market sentiment was mixed to negative, with down-trending intraday movement and losses in key sectors. Therefore, analysts expect trading to remain negative in today’s session. 

Stock Watch: GUARANTY has lost 4% in the last eight sessions to settle at N37.05. The stock is currently trading at a 9% YTD loss and is currently trailing Vetiva Target price of N51.53. 

Corporate Disclosures 

The Board of Directors of International Breweries Plc has notified shareholders of the appointment of Mr Andrew Scott Murray as a non- Executive Director of the company. 

The Board of Directors of Lafarge Africa Plc has notified the Nigerian Stock Exchange of the resignation of Ms Sylcie Rochier as a non- Executive Director and the appointment of Mr Jean-Philippe Benard as a non-Executive Director of the board effective from 31 October 2018.

Reporting for EasyKobo on Thursday , 08 November 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited