Bills and Equity Market Update   

Mixed trading persists as CBN maintains tight grip on liquidity 

14 December 2018 ( Lagos ) : Amid a N499 billion OMO repayment, the CBN offered N500 billion and sold c.N296 billion on the 91DTM, 182DTM and 364DTM bills at stop rates of 11.90%, 13.50% and 15.00% respectively (effective yields: 12.26%, 14.27% and 17.64%). As a result of the improvement in liquidity, the interbank call rate declined from 60.37% to close at 16.50%. 

Trading in the T-bills space remained mixed as sell pressure on short-dated bills was balanced out by yield declines across the rest of the space. Whilst the yields on the 21DTM and 77DTM bills advanced 45bps and 39bps to settle at 15.56% and 15.19% respectively, the yields on the 231DTM and 343DTM bills advanced 35bps and 37bps to settle at 16.32% and 17.42% respectively. Meanwhile, the bond space saw a reversal of yield direction, with benchmark yields declining 4bps amid modest demand across the space. Most notably, yield on the 12.50% FGN JAN 2026 bond declined 13bps to close at 15.71%. 

Analysts anticipate another OMO auction today as the CBN maintains its tight grip on liquidity. Thus, analysts foresee muted activity in the fixed income market at week close. 

Market dips as Oil & Gas index sheds 4% 

Despite an even split between sector gainers and losers, the NSE ASI moderated 24bps thanks to a large decline in the Oil & Gas sector. 

As previously stated, the Oil & Gas sector was the biggest loser, shedding 415bps after losses in SEPLAT (-983bps) and OANDO (- 200bps) outweighed gains in FO (+979bps), ETERNA (+659bps), and MOBIL (+357bps). The Consumer Goods sector (-10bps) also moderated after a loss in FLOURMILL (-187bps) countered a gain in DANGSUGAR (+76bps). On the other hand, the Banking (+43bps) and Industrial Goods (+12bps) sectors gained marginally thanks to STERLNBNK (+757bps) and CAP (+750bps). 

Market breadth remained negative with 20 advances and 22 declines. 

Market Outlook 

While investor interest on select stocks remains evident, broad market sentiment has shown little sign of improvement. Thus, analysts expect a muted close to the week, with a negative tilt. 

Stock Watch: FO gained 979bps in yesterday’s session to take its gains for the week to 34%. The stock is trading 45% lower than its year-open price and is underperforming the Oil & Gas sector (-19%). 

Corporate Disclosures 

The Board of Directors of Trans-Nationwide Plc has announced the retirement of its Managing Director, Mrs Chidinma Iheme, effective 12 December 2018. It also announced the hiring of Mr Theodore Chikelu as acting Chief Executive Officer. 

The Board of Directors of Continental Reinsurance Plc has notified stakeholders that the Federal High Court has directed that a meeting of shareholders be convened on 20 December 2018. 

Reporting for EasyKobo on Friday , 14 December 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited

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