Bears dominate equity market, ASI declines 212bps w/w 

01 March 2019 : After a broadly negative week, the Nigerian Bourse gained 34bps today for the second time, leading to a cummulative loss of -212bps w/w. Breaking it down, the Banking (+40bps d/d, -588bps w/w) sectors closed the week down despite recording the highest gains on Friday, thanks to ACCESS (+351bps d/d, -781bps w/w) and UBA (+201bps d/d, -500bps w/w). Similarly, the Oil & Gas (+30bps d/d, -133bps w/w) and Industrial Goods (+26bps d/d, +93bps w/w) sectors ended the day in the green when TOTAL (+526bps d/d, +256bps w/w) and DANGCEM (+67bps d/d, +218bps w/w) moved up. Finally, the Consumer Goods sector (+8bps) gained marginally after upticks in HONYFLOUR (+305bps d/d) and NESTLE (+272bps d/d, -433bps) erased losses in UNILEVER (-561bps d/d, -10.00% w/w) and INTBREW (-476bps d/d, w/w). 

Given the reaction of investors to the election results this week, analysts highlight the possibility of negative sentiment trickling down into the market next week. That said, analysts expect bargain hunting to drive positive trading as investors take up undervalued stock leading to a mixed session at week start. 

Stock Watch: CORNERST is the best perfoming stock on the exchange this week, gaining 19% over three of five sessions. The stock gained 8.70% today to settle at N0.25, its highest price since September 2018. 

Yields decline even further as positive trading persists 

The CBN conducted its bi-monthly T-bills PMA on Wednesday, selling its full offer of N115 billion across the 91DTM, 182DTM and 364DTM bills at stop rates of 10.90%, 13.01% and 14.37% (Effective rates: 11.20%, 13.91% and 16.77%) – lower than previous auction levels. Meanwhile, the CBN also slowed down frequency of OMO auctions, conducting just one on Thursday and selling N1.08 trillion (Offer:N400 billion), across the 91DTM, 182DTM and 364DTM bills at stop rates of 11.90%, 13.50% and 14.30% (Effective rates: 12.26%, 14.47% and 16.68%). Notably, whilst stop rates were unchanged on the 91DTM and 182DTM, they moderated significantly (70bps) on the 364DTM bill. Amidst this, the Interbank Call rate declined 250bps w/w to settle at 16.33%. 

With the CBN continuing the slowdown of aggressive liquidity mop-ups this week, yields declined an average of 148bps w/w in the T-bills secondary market. Particularly, the yields on 27DTM, 188DTM and 342DTM bills declined 264bps w/w, 198bps w/w and 202bps w/w respectively to settle at 9.39%, 12.90% and 15.22%. Similarly, the bond market saw increased participation from both local and foreign investors, leading to stronger demand for securities. Overall, trading was broadly bullish, with yields declining 54bps w/w on average. Specifically, the yields on the 13.98% FGN FEB 2028 and 16.2499% FGN APR 2037 bonds declined 83bps and 63bps respectively w/w to close at 13.86% and 13.84%. 

Given the change in frequency of OMO auctions over the past two weeks, analysts interprete this as a change in CBN’s liquidity stance and expect this trend to continue. That said, analysts except demand to remain elevated in the Fixed Income market next week even as investor interest strengthens. 

Corporate Disclosures 

The Board of Directors of Custodian Investment Plc has notified the Nigerian Stock Exchange and shareholders of a meeting scheduled for March 14 2019 to consider the Audited Financial Statements for year ended December 31, 2018 and a closed period from February 28 2019 until 24 hours after the audited statements have been released.

Reporting for EasyKobo on Friday , 01 March 2018 in Lagos, Nigeria

Source: Vetiva Capital Management Limited