Weekly Market Wrap - 27 July 2018

ASI marks first positive w/w close in four weeks                                              

The Nigerian Equity market drew to a positive close, finishing 58bps higher on Friday majorly supported by Oil & Gas stocks. The All-Share Index however recorded a modest 9bps w/w rise amidst notable losses recorded at mid-week. Though the market managed a positive performance at week close, we believe outcome of earnings releases will remain the major determinant of market direction in the coming week. That said, we foresee a mildly positive start to the week noting the widely positive market breath at week close.                                                            

Stock Watch: FCMB released its H1’18 results earlier today. The company recorded an 8% y/y rise in Gross earnings, in line with Vetiva estimate, and a 90% y/y increase in PAT, 19% below Vetiva estimates. The stock gained 355bps on Friday to settle at N2.04 – a 38% ytd return.                                                        

Sizeable OMO mop-ups keeps sentiment downbeat                                                      

Trading pattern remained negative across the T-bills market at week close noting the total ₦585 billion liquidity mopped up through OMO auctions during the week. In particular, yields on the 48DTM and 118DTM bills rose 100bps and 25bps respectively to 12.28% and 11.50%. Similarly, trading was bearish across the bonds space, with average yields on benchmark notes rising 3bps d/d. Notably, the yield on the 15.54% FGN FEB 2020 and 16.2499% FGN APR 2027 bonds rose 78bps and 6bps to 13.73% and 14.22% respectively. Overall, yields rose 3bps across the T-bills market w/w and rose 5bps on average across benchmark bonds w/w. Whilst we expect the tightened liquidity to keep yields elevated across the fixed income market at week open, we highlight a potential demand boost from asset managers, driven by a Commercial Paper maturity from FLOURMILL due on Tuesday.                                                      

The CBN continued its regular interventions in the currency market this past week, through a spate of spot and forward currency sales. Notably, the apex bank sold $210 million on Thursday, across various windows in the market. Meanwhile, the naira depreciated ₦0.68 w/w at the I&E FX Window to close at ₦362.28 against the dollar while remaining stable throughout the week at ₦358.50 in the parallel market. We expect the naira to remain stable across the various windows of the currency space as the CBN continues to intervene in the FX market.