FREE

The Market Today - 24 October 2018

CBN survey shows improvement in consumer confidence CBN survey shows improvement in consumer confidence  The Consumer Expectations Survey for Q3’18 conducted by the CBN showed an improvement in the overall outlook of economic conditions in Nigeria by consumers. Particularly, the index came in mildly positive for the first time this quarter, printing at 1.5 pts (Q2’18: -6.3 pts). Notably, consumers were more positive on economic conditions, family financial situations and family income for the current quarter and in the next 12 months. We believe the mild recovery in sentiment however remains fragile as most respondents indicated that they did not intend to purchase cars, houses and other big-ticket items as the next 12 months would not be an ideal time. Respondents also expect that the naira will appreciate, although believe prices of goods and services will rise in the coming quarter. Overall, despite a mildly more optimistic view on the economy, the report indicates a bearish undertone from consumers, likely as a result of election uncertainty. ASI persists positive despite mixed reactions to earnings In yesterday’s trading session, the 69bps gain was as a result of solid gains in three of the four key sectors as market sentiment remained relatively upbeat amidst earnings. • Market breadth turned negative with 17 advances and 18 declines. As investors continue to react to earnings releases, and market performance persists positive, we expect to see further gains in today’s session. Stock Watch: ACCESS released its 9M’18 results reporting a 12% y/y rise in Revenue and PAT to ₦274 billion and ₦63 billion respectively. Despite positive results, the stock shed 62bps in yesterday’s session to settle at ₦7.95, placing the stock at a 23% loss from its year open price (YTD; 24%).  Market remains mixed amidst improved liquidity Following an improvement in system liquidity (c.₦200 billion as at yesterday), the interbank call rate declined 500bps to 15.00%. Sentiment in the fixed income market remained mixed with a bearish tilt. For instance, yields in the T-bills space rose 13bps on average despite mild buying on select bills. Particularly, whilst the yields on the 16DTM and 65DTM bills advanced 61bps and 45bps to settle at 12.91% and 12.98% respectively, yield on the 72DTM bill declined 28bps to settle at 13.15%. Meanwhile, in the bond space, negative sentiment was less pronounced as benchmark yields advanced 1bp on average. Whilst selling was weighted towards short-term maturities – yield on the 14.50% FGN JUL 2021 bond advanced 8bps to settle at 15.09% - the long end of the curve saw a bit of demand as yield on the 12.15% FGN JUL 2034 bond declined 5bps to settle at 15.32%. We foresee improved demand for treasury bills due to improved system liquidity. In the bond space however, we expect a less positive trading session as the bond auction comes into focus. The DMO is offering ₦115 billion across the 5-year, 7-year and 10-year bonds and we expect stop rates to close slightly higher than previous stop rate levels.