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Weekly Market Wrap - 15 March 2019

Market loses 245bps w/w, YTD turns negative                                                  

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 we foresee bearish sentiment continuing next week, we expect the sell-offs to ease off leading to a mixed week.

Stock Watch: ACCESS released its FY’18 results today posting topline and bottom line figures of ₦542.9 billion (+15% y/y) and at ₦94.0 billion (+96% y/y) respectively. The stock lost 2.5% to settle at ₦5.80, 14.7% below its year open price.                                                    

T-bills primary market rates on the decline                                                        

Whilst ₦212 billion was added to system liquidity this week via an OMO maturity, the CBN mopped up ₦401 billion in an OMO auction on Thursday. In the same vein, the CBN also conducted its bi-monthly PMA, selling the full offer of ₦89.5 billion, even as subscription hit ₦600.5 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%. Following an adjustment of secondary market rates to auction levels, we expect activities in the T-bills market to turn tepid at the start of next week as investors trade cautiously. Also, we foresee this sentiment trickling in to the bond market leading to a quiet session.                                                              

The Naira appreciated ₦0.24 w/w at the I&E FX Window to settle at ₦360.18 and remained flat w/w at ₦358.50 against the dollar in the parallel market. We expect the naira to remain largely stable across the various windows of the currency space as the CBN maintains interventions in the FX market.