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Weekly Market Wrap - 6 July 2018

Market caps bearish week in the red                                                    

Bears returned to the bourse today after a glimmer of hope in yesterday’s session, with the ASI closing 31bps under (-171bps w/w). With market sentiment staying negative at week close after a week of bearish trading, we expect the tepid sentiment to filter into the market at week open.                                                                                                                                                                                                                                                                                                                                                                                            

Stock Watch: PRESTIGE has shed 21% over the last ten sessions, including 545bps today. The stock currently trades at a price of ₦0.52 and has returned 4% YTD, below the insurance sector's 9% YTD performance.                                                   

Demand evident amidst buoyant system liquidity                                                          

In the absence of a liquidity mop-up today, sentiment in the T-bills space was bullish – yields moderated 21bps on average. Specifically, yields on the 27DTM (-94bps to 11.98%), 118DTM (-54bps to 12.23%) and 146DTM (-35bps to 12.34%) bills declined. Meanwhile, trading in the bond space remained tepid, with yields on benchmark bonds advancing 3bps on average. Specifically, yields on the 16.00% FGN JUN 2019 bond and 16.39% FGN JAN 2022 bonds rose 17bps and 20bps to settle at 13.25% and 13.80% respectively. Overall, the fixed income market traded mixed this past week, with yields on T-bills declining 59bps w/w on average while benchmark bonds rose 26bps w/w on average. Barring any significant OMO mop up next week, we expect buy sentiment to persist in the fixed income market, with most of the demand weighted towards the T-bills space.                                                             

The CBN intervened in the FX market, injecting $210 million into various market segments at week open. Amidst this, the naira depreciated ₦1.26 w/w at the I&E FX Window to close at ₦362.58 against the dollar but appreciated ₦1.00 w/w in the parallel market to settle at ₦359.50. 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.