Weak sentiment, uncertainty to constrain FI activity 

13 November 2018 : With the CBN refraining from conducting a mop-up at week open, the Interbank Call rate fell 183bps to settle at 6.08%. Meanwhile, system liquidity stood at c.N347 billion. In other news, the Federal Government kicked off a roadshow for the upcoming Eurobond issue yesterday. The issue will consist of 7-yr and 12-yr (re-issue) notes and is expected to open sometime in November. 

In spite of the healthy liquidity, investor appetite remained weak across the Fixed Income market. Specifically, activity was mixed in the T-bills space, with no clear trading pattern emerging. Notably, the yield on the 31DTM bill declined 59bps to settle at 10.88% while the yield on the 38DTM bill advanced 25bps to settle at 12.60%. Meanwhile, the bond space was also mixed, albeit with yields advancing 3bps. Buying was observed on the shorter-end of the curve whilst selling dominated the mid-to-long-end. Specifically, the yield on the 15.54% FGN FEB 2020 bond declined 8bps to settle at 14.64% while the yield on the 16.25% FGN APR 2037 bond advanced 14bps to settle at 15.56%. 

Amidst still weak investor sentiment, analysts anticipate another muted session in the T-bills space. Also, ahead of the release of the November bond circular, analysts expect mixed trading to persist in the bonds space. 

Banking sell-offs drive market lower at week open 

The market started the week on a downbeat note, as sell-offs in the Banking sector offset mild gains across Consumer Goods and Oil& Gas names, leaving the ASI in negative territory. 

• As mentioned above, the Banking sector (-106bps) was the sole loser, weighed down by losses in heavyweights GUARANTY (-175bps), ZENITHBANK (-164bps) and UBA (-63bps) and ACCESS (-63bps). Meanwhile, the Oil & Gas (+75bps) and Consumer Goods (+17bps) sectors gained thanks to some buy activity on OANDO (+645bps), NB (+12bps), and FLOURMILL (+714bps). Finally, the Industrial Goods sector closed flat, with no price movers in the sector. 

Market breadth remained positive with 14 advances and 12 declines. 

Market Outlook 

Market activity remained well below average amid varied investor sentiment and tepid market activity. As such, analysts expect an extension of the see-saw movement on the All-Share Index as the week progresses. 

Stock Watch: Amid news of Teleology Holdings finalizing the acquisition of 9mobile, analysts foresee a potential improvement in sentiment across the lenders (such as GUARANTY, ZENITHBANK and ACCESS) that have an exposure to 9mobile debt. 

Corporate Disclosures 

The Board of Directors of Access Bank Nigeria Plc has notified the Nigerian Stock Exchange and the general public that it has not entered into any discussions with Diamond Bank or any other institution. 

The Board of Directors of Diamond Bank Nigeria Plc has notified the general public that it is not in discussions with any financial institution at the moment over any form of merger or acquisition.

Reporting for EasyKobo on Tuesday , 13 November 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited