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The Market Today - 02 November 2018

Negative market performance persists                                                

The NSE ASI inched up 37bps in today’s trading session, but still closed the week 238bps down. The Banking sector (+88bps d/d; -38bps w/w) gained with movements in ACCESS (+570bps d/d; +503bps w/w ) and ZENITHBANK (+151bps d/d; -368bps w/w). Likewise, the Oil & Gas sector (+28bps d/d; -262bps w/w) saw an uptick on the back of gains in SEPLAT (+154bps d/d; -309bps w/w) and OANDO (+297bps d/d; flat w/w). The losers on the day were the Industrial Goods  and  Consumer Goods sectors which moderated -41bps (-406bps w/w) and -11bps (-325bps w/w) respectively following losses in CCNN (-10.00% d/d; -18.84% w/w) and PZ (-9.50% d/d; -13.04% w/w). Following negative investor sentiment observed throughout the week and reduced activity at week close, we expect trading to resume negative in subsequent trading sessions.                       

Stock Watch: UNITYBNK released all outstanding results dating up to 9M’18 result today, reporting a 60% decline in topline to ₦26.1 billion and a 76% fall in PAT to ₦585.8 million in the most recent period. The company’s stock fell 897bps in today’s session to settle at ₦0.71, a 34% YTD gain. The NSE had placed a trading suspension on the stock yesterday but this was lifted today.                                                        

PMA and OMO stop rates fuel market uncertainty                                                         

The CBN conducted PMA and OMO auctions on Wednesday and Thursday respectively. Whilst stop rates closed higher than previous auction levels at the PMA, the stop rates at the OMO came in line with than previous auction levels. Amidst market liquidity of c.₦75 billion at week close, the interbank call rate declined 625bps to close at 4.08%. The treasury bills secondary market traded bullish during the week as yields declined 69bps on average w/w (-31bps d/d). Meanwhile, the bond space was negative with benchmark yields advancing 24bps w/w on average (0bp d/d). Given market uncertainty following conflicting signals sent by the CBN at the PMA and OMO auctions this week, we expect tepid trading activities as investors tread cautiously.                                                   

The CBN injected $210 million at the Interbank Foreign Exchange on Tuesday. The Naira appreciated ₦0.10 w/w at the I&E FX Window to settle at ₦363.74 against the dollar and remained stable at ₦361.00 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.