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Weekly Market Wrap - 07 December 2018

Flat close for ASI amid mixed trading sessions                                                  

Following a 15bps uptick on Friday, the All-Share Index closed nearly flat w/w (-2bps) amidst varied closes through the week. The Consumer Goods sector (d/d: +195bps; w/w:+64bps) was the sole gainer on the day, thanks to advances in  NESTLE (d/d: +466bps) and DANGSUGAR (d/d: +305bps).  While bargain hunting has been more visible on the exchange, notable selling has also persisted across select stocks. Nevertheless, we anticipate a slightly positive start to next week’s trading as investors continue to snap up downbeaten stocks.                     

Stock Watch: DIAMONDBNK has been on an uptrend this week, gaining 57% w/w to settle at ₦1.02. We note the improvement in investor sentiment on the stock since the CBN officially converted the bank to a national bank.                                           

Tight liquidity pushes yields higher in secondary market                                                            

"With the CBN keeping a lid on system liquidity, the interbank call rate advanced 776bps w/w to settle at 24.33% on Friday. Overall, the CBN sold ₦646 billion in OMO auctions this week, including ₦288 billion at a special OMO on Thursday. With the CBN showing no indications of slowing down on OMO auctions, we anticipate further slowdowns in demand at the secondary FI market next week.                                          

"The Naira depreciated ₦1.23 w/w at the I&E FX Window to settle at ₦365.33 against the dollar and declined ₦3.50 against the dollar to settle at ₦364.00 w/w in the parallel market. Despite increased pressure on the currency during the festive season, we expect the naira to remain relatively stable across the various windows of the currency space as the CBN maintains interventions in the FX market.