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The Market Today - 13 February 2018

New rules on block divestments and large volume trades                                                         

Effective yesterday, the Nigerian Stock Exchange began the implementation of new rules that govern the conduct of large trades and block divestments. The new rules amend the designation of large trades to include the lower of 80 million share units, a trade value of ₦800 million, or a minimum of 5% (but below 30%) of issued share capital, and requires the stockbroker to notify the exchange before or within 24 hours of the trade. Also, any trade which involves a transfer of more than 30% of total listed shares, a transfer of shares which takes a shareholder’s total holdings over 30% or a transfer of less than 30% but involves a material shake-up in board constitution shall be treated as a block divestment. The exchange now requires stockbrokers to obtain approval before such trades can be consummated. A breach of these new rules would result in a 10-day suspension of the dealing member as well as a fine of not less than five percent of the value of the trade or block divestment.                                                         

Bears dominate at week open, ASI down 90bps                                                               

Bearish sentiment continued to plague the Nigerian equity market, with the ASI closing in negative territory for the sixth consecutive session – longest losing streak since November 2016. Trading remained bearish at week open amidst even steeper losses recorded across all major sectors on the exchange. We expect the downbeat sentiment to filter into today’s session, thus keeping stock prices subdued.

Stock Watch: ACCESS has shed 10% over the last six sessions after hitting a five-year high of ₦12.97 earlier this year. The stock currently trades at ₦11.55, below Vetiva’s target price of ₦13.91, and has returned 11% ytd.                                                  

Mild moderation in FI market at week open                                                      

The CBN conducted another OMO auction, offering ₦50 billion across the 94DTM and 241DTM bills at respective stop rates of 12.60% and 14.40% (effective yields: 13.02% and 15.91%). Trading in the T-bills market was mixed as yields trended in opposite directions. The Bond space was likewise mixed but with a more bullish tilt. We expect buying sentiment in the fixed income market to be supported by the ₦47 billion coupon payment on the 15.54% FGN Feb 2020 note. Despite this, we anticipate CBN liquidity mop up dampening activity in the space.