Bourse closes positive amidst negative w/w 

19 November 2018 : The market ended trading for the week on a positive note, gaining 61bps on the day but losing 44bps w/w. Notably, after losing all week (w/w:-83bps), the Banking sector saw a rebound of 375bps today, driven by gains in GUARANTY (d/d:+853bps; w/w:-67bps) and ZENITHBANK (d/d:+300bps; w/w:-164bps. Meanwhile, all other sectors closed red, led by the Industrial Goods sector (d/d:-47bps; w/w:+102bps) after DANGCEM (d/d:-73bps; w/w:-73bps) and CCNN (d/d:-27bps; w/w:+307%) posted losses. The Consumer Goods (d/d:-36bps;w/w:+4bps) and Oil & Gas sectors (d/d: -31bps; w/w:-113bps) also fell, dragged by NESTLE (d/d:-133bps; w/w:+137bps)and OANDO (d/d:-99bps; w/w:+753bps). 

With weak sentiment continuing to drive tepid activity, analysts foresee another mixed to negative start to next week’s trading. 

Stock Watch: DIAMONDBNK has lost in 4 sessions this week and currently trades at -40% YtD. The stock shed 526bps today to settle at a year-low of N0.90. 

Bearish market continues amidst tightened liquidity 

System liquidity remained tight this week, mostly affected by the OMO auction where the CBN sold a total of N320 billion (N500 billion offered). Amidst this, the interbank call rate advanced 208bps w/w to close at 6.33% on Friday. 

Amidst constrained liquidity, trading in the T-bills space was mixed with a negative tilt this week, with yields advancing 15bps w/w and 1bp today. Specifically, whilst yields on the 76DTM and 258DTM bills advanced 72bps w/w and 118bps w/w to settle at 12.75% and 15.41% respectively, the 62DTM bill declined 35bps to settle at 13.06%. Likewise, trading in the bond space was bearish, with yields on benchmark bonds advancing 7bps w/w and 1bp today. Notably, yields on the 16.29% FGN MAR 2027 and 16.25% FGN APR 2037 bonds advanced 7bps and 17bps w/w to settle at 15.69% and 15.59% respectively. 

Following still-tight market liquidity and tepid investor sentiment, analysts expect trading to remain muted in the fixed income market at week open. 

The CBN injected $210 million at the Interbank Foreign Exchange on Wednesday. The Naira depreciated N0.41 w/w at the I&E FX Window to settle at N364.01 against the dollar and depreciated N1.00 w/w to settle at N362.50 in the parallel market. 

Analysts expect the naira to remain stable across the various windows of the currency space as the CBN continues to intervene in the FX market.

Reporting for EasyKobo on Monday , 19 November 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited