Weekly Market Wrap - 05 October 2018
Quarter gets off to bad start with all red closes
The fourth quarter got off to a bearish start as the market shed 12bps on Friday to close out the week 117bps down. Trading was mostly negative today despite an even split between gaining and losing sectors. The Banking sector (w/w: -65bps) capped off the week with a 147bps loss on the day no thanks to losses in heavyweights, ZENITHBANK (d/d: -379bps; w/w +23bps), GUARANTY (d/d:-95bps; w/w:-41bps), and UBA (d/d:-61bps; w/w -238bps). The Industrial Goods (w/w: -35bps) sector finished with a flat close, but lost for the week as DANGCEM (w/w: -244bps) and CCNN (w/w:-119bps) sustained losses during the week. Meanwhile, a sharp upturn in the Consumer Goods sector at week close (d/d: 110bps) was unable to offset earlier losses in the week with the sector closing -32bps lower w/w driven by NB (d/d: +370bps; w/w:-197bps) and GUINNESS (d/d:+122bps; w/w: -125bps). The Oil and Gas sector (d/d:+30bps ; w/w: +113bps) was the sole gainer w/w thanks to strong showings from FO (w/w: +10.22%) and OANDO (d/d: +196bps; w/w: +400bps).
Stock Watch: After gaining 10% this week, FO closed at ₦22.10 on Friday, its highest price since August. Having lost 49% YTD, the stock is trading below its Consensus target price of ₦41.69 and is underperforming the Oil and Gas sector (-12% YTD).
High primary market sales volumes dampen T-bills space
Due to low liquidity levels following yesterday’s large OMO sale of ₦553 billion (₦400 billion offered), the interbank call rate advanced 919bps to close at 20.86%. Following the aggressive liquidity mop up observed in the last few trading sessions, we expect the tight system liquidity to cap demand across the fixed income market at week open.
The CBN continued its intervention in the Foreign Exchange market, Injecting $210 million into the various FX windows on Wednesday. Amid this, the naira appreciated ₦0.10 w/w at the I&E FX Window to settle at ₦363.82 against the dollar while remaining flat at ₦359.50 in the parallel market.
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