Market loses 245bps w/w, YTD turns negative 

15 March 2019 : To close a broadly negative week, the NSE ASI lost 22bps on Friday leading to a w/w loss of 245bps and turning year-to-date returns negative (-97bps). Notably, the Banking sector (-80bps d/d, -613bps w/w) posted the largest loss on the day and for the week driven by UBA (-261bps d/d) and ACCESS (-252bps). Similarly, Industrial Goods (-5bps d/d. -112bps w/w) and Consumer Goods (-3bps d/d, 43bps w/w) sectors shed points after losses in WAPCO (-39bps) and DANGFLOUR (-97bps). Finally, the Oil & Gas sector (+32bps) was the sole gainer thanks to upticks in OANDO (+174bps) and MOBIL (+61bps). 

Despite a few positive earnings releases, the market sustained its negative performance today. Although analysts foresee bearish sentiment continuing next week, analysts expect the sell-offs to ease off leading to a mixed week. 

T-bills primary market rates on the decline 

Whilst N212 billion was added to system liquidity this week via an OMO maturity, the CBN mopped up N401 billion in an OMO auction on Thursday. In the same vein, the CBN also conducted its bi-monthly PMA, selling the full offer of N89.5 billion, even as subscription hit N600.5 billion. Notably, with the CBN easing up on regular OMOs and holding off on offering the 1-year bill at the OMO auction, stop rates at this week’s auctions moderated sizably, with the 1-year bill closing at a record low of 12.845% (lowest since August 2017). Amidst this, the Interbank Call rate declined 516bps w/w to settle at 11.17%. 

Meanwhile, spurred by lower stop rates at the auction, trading in the treasury bills market was positive this week, with average yields declining in four of five sessions. Overall, T-bill yields declined 29bps on average w/w. Notably, the yields on the 97DTM and 314DTM bills declined 61bps and 74bps respectively to settle at 12.35% and 14.19%. Similarly, there was demand in the bond market with yields on benchmark bonds declining 7bps w/w. Specifically, the yields on the 13.98% FGN FEB 2028 and 16.2499% FGN APR 2037 declined 6bps and 16bps respectively to settle at 14.24% and 14.09%. Notably, some sell-offs were observed on a particular bonds with the 12.1493% FGN JUL 2034 bond advancing 17bps to settle at 14.34%. 

Following an adjustment of secondary market rates to auction levels, analysts expect activities in the T-bills market to turn tepid at the start of next week as investors trade cautiously. Also, analysts foresee this sentiment trickling in to the bond market leading to a quiet session. 

The Naira appreciated N0.24 w/w at the I&E FX Window to settle at N360.18 and remained flat w/w at N358.50 against the dollar in the parallel market. 

Analysts expect the naira to remain largely stable across the various windows of the currency space as the CBN maintains interventions in the FX market. 

Corporate Disclosures 

The Board of Directors of United Bank for Africa Plc has announced a final dividend of N0.65 per share, bringing the total dividend for the year ended 31 December 2018 to N0.85. The bank’s register of members will be closed between 3 April 2019 and 9 April 2019. 

The Board of Directors of Access Bank Plc has announced a final dividend of N0.25 per share, bringing the total dividend for the year ended 31 December 2018 to N0.50. The bank’s register of members will be closed between 11 April 2019 and 25 April 2019.

Reporting for EasyKobo on Friday , 15 March 2019 in Lagos, Nigeria

Source: Vetiva Capital Management Limited