Bills and Equity Market Update   

Treasury bills market turn mixed as OMO auctions resume 

05 March 2019: At the start of the week, the CBN conducted an OMO auction, selling N184 billion (Offer: N200 billion) across the 94DTM and 192DTM bills at stop rates of 11.90% and 13.48% respectively (effective yields: 12.28% and 14.51%). Notably, whilst the rate on the 94DTM bill was unchanged, the stop rate on the 192DTM bill moderated 2bps from previous levels. Meanwhile, the Interbank Call rate advanced 233bps to 14.00%. 

Amidst this, trading in the secondary T-bills market turned mixed, with buy sentiment especially prevalent at the longer-end of the curve. Overall, yields moderated 3bps on average, with notable movements on the 74DTM (yields up 107bps to 11.83%) and 332DTM (yields down 115bps to 15.58%) bills. However, sell pressure was more prevalent in the bond market, with benchmark yields advancing 5bps on average. Remarkably, yields on the 10.00% FGN JUL 2030 and 16.25% FGN APR 2037 bonds advanced 9bps and 31bps respectively to settle at 14.00% and 14.15% respectively. 

Analysts foresee continued sell-offs in the bond space as demand from foreign participants taper off and investors continue to take profit. Meanwhile, analysts expect the CBN to refrain from conducting another OMO auction today, leading to improved demand in the T-bills space as system liquidity improves. 

Equity market opens positive as Banks surge 266bps 

The Nigerian Bourse rose 95ps at week open as three of four key sectors performed positively, led by the Banking sector. Amidst this, market activity moderated with value of trades printing below the 30-day average at N2.6 billion. 

Recording the best performance, gains in the Banking sector (+266bps) were driven by heavyweights GUARANTY (+479bps) and ZENITHBANK (+230bps). Similarly, the Consumer Goods (+43bps) and Industrial Goods (+31bps) sectors also closed in the green, thanks to upticks in INTBREW (+800bps) and DANGFLOUR (+505bps) outweighing a loss in PZ (-967bps), while DANGCEM (+20bps) also closing positive. Finally, the Oil & Gas sector remained flat with no movements within the sector. 

Market breadth remained positive with 24 advances and 9 declines. 

Market Outlook 

With indications of bearish sentiment following the Presidential election easing off, analysts expect to see continued demand on select stocks in today’s session leading to another positive close. 

Stock Watch: WEMABANK gained 9% yesterday to close at a share price of N0.84. The stock has gained 14% in the past two sessions and has recorded a year-to-date return of 33%, outperforming the Banking sector (+6%).

Reporting for EasyKobo on Tuesday , 05 March 2019 in Lagos, Nigeria

Source: Vetiva Capital Management Limited

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