CBN continues with high OMO frequency 

05 December 2018: The CBN conducted an OMO auction yesterday, offering N250 billion across three maturities and selling N95 billion on the 191DTM and 324DTM bills at stop rates of 13.50% and 15.00% respectively (effective yields: 14.53% and 17.31%) – in line with previous auction rates. Meanwhile, the interbank call rate advanced 200bps, closing at 8.67%. 

In the secondary fixed income market, trading turned mixed, albeit still with a bearish tilt. Whilst mild demand was observed across select maturities, sell sentiment prevailed in the treasury bills space, with yields climbing 28bps on average. Notably, whilst the yield on the 149DTM bill rose 154bps to 14.83%, the yield on the 58DTM bill fell 43bps to 12.96%. The bond market was similarly mixed, with average benchmark yields rising 1bp on the day. Whilst yield advanced 1bp on the 13.98% FGN MAR 2028 bond to close at 16.01%, the yield on the 14.20% FGN MAR 2024 declined 1bp to settle at 15.29%. 

With the CBN showing no signs of slowing down on its mop up actions, analysts foresee another bearish trading session in the secondary market today. 

Banking sector supports a 68bps gain in ASI 

The ASI gained 68bps yesterday supported solely by a strong uptick in the banking sector. 

The Banking sector (+262bps) turned positive following advances in UBA (+667bps) and GUARANTY (+375bps). On the other hand, the Industrial Goods sector (-94bps) recorded a loss after a decline in WAPCO (-448bps). The Consumer Goods sector moderated 13bps after a loss in NB (-50bps) was watered down by a gain in CADBURY (+266bps). The Oil & Gas sector remained flat, with no movements in the sector. 

Market breadth remained positive with 26 advances and 17 declines. 

Market Outlook 

With bargain hunting supporting a positive close and improved market sentiment, analysts foresee a mixed trading pattern with a positive tilt in today’s session. 

Stock Watch: After straight losses, FBNH has gained in 3 consecutive trading sessions. The stock gained 270bps yesterday to settle at N7.60 and is currently trading at 14% its year open price.

Reporting for EasyKobo on Wednesday , 05 December 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited