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The Market Today - 15 January 2019

NSE CEO sees a tale of two halves for equity market in 2019                                         

The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr Oscar Onyema briefed stakeholders yesterday at a session held on the performance of the market in 2018 and his expectations for the new year. Reviewing the performance of the market in 2018, he noted that listing activity remained low- only one new listing and four de-listings- even as equity turnover declined by 5.45% y/y to ₦1.20 trillion. Mr Onyema also spoke about the NSE’s derivatives initiative with plans to roll out derivatives trading on the NSE platform already in motion, with the rulebook for this new facet of trading already undergoing approval while dealing members are being enlisted. Speaking on his outlook for 2019, Onyema noted that the NSE anticipates volatility in the first half of the year and stability post-elections. He also highlighted that swift approval of the 2019 budget would be essential for companies’ earnings and consumer spending, expecting an uptick in market activity during the second half of 2019.                                      

DANGCEM lifts market in disrupted trading session                                              

The market closed 45bps up despite mild losses across three of four keys sectors yesterday, even as weak investor sentiment and a disrupted trading session led to low market turnover (₦1.08 billion). Market breadth was flat with 11 advances and 11 declines. While trading was muted due to the disrupted trading session and weak investor sentiment, we expect activity to return to normal in today’s session and foresee a more active market with a slightly positive tilt.                                           

Stock Watch: WAPCO has gained 10% in the last 7 sessions to settle at ₦12.50. The company is currently in the process of raising additional capital through a rights issue that is due to close on 23 January 2019                                      

Fixed income market remains mixed at week open                                              

At the start of the week, the CBN conducted an OMO auction, offering ₦50 billion and selling ₦25 billion across the 94DTM, 185DTM and 353DTM bills at stop rates of 11.90%, 13.50% and 15.00% respectively (effective yields: 12.28%, 14.49% and 17.55%). Amidst this, the Interbank Call rate advanced 11.67% to settle at 31.67%. We expect another OMO auction today, with the CBN intent on maintaining pressure on system liquidity. Thus, we foresee further mixed trading in the fixed income space.