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The Market Today - 31 December 2018

Year ends upbeat even as ASI closes -17.81% YTD                                                           

"The NSE ASI closed the last day of 2018 in the green, gaining 127bps to take the gains for December to +180bps, the first positive m/m close since June. That said, the ASI still fell 18% this year, dragged by losses in 9 of 12 months. The biggest gainer was the Oil & Gas sector (+373bps d/d), thanks to SEPLAT (+802bps) and OANDO (+204bps). Likewise, the Consumer Goods (+142bps), Industrial Goods (-62bps d/d) and Banking (+30bps) sectors closed up, as NB (+427bps), NESTLE (+34bps), PZ (+568bps), DANGCEM (+366bps), ZENITHBANK (+22bps) and GUARANTY (+44bps) all gained to send their respective indices higher. As the year turns, we anticipate further positive activity as investors continue to take advantage of depressed stock prices. Thus, we foresee another positive session when trading resumes.                                                            

Stock Watch: CCNN was the best performing stock in 2018, gaining 104% YTD and closing the year at ₦19.40. However, the stock closed 38% below its year-high of ₦31.35 which was achieved in July.                                                 

FI market ends 2018 with a whimper                                                     

The CBN sold ₦19 billion (₦220 billion offered) in an OMO auction today across the 94DTM, 185DTM and 346DTM bills at stop rates of 11.90%, 13.50% and 15.00% respectively. A special OMO was also conducted, selling ₦135 billion on the 346DTM bill. In the last trading session of the year, the fixed income secondary market was mostly quiet with very little activity in both the bond and treasury bills space. With traders cautious about taking positions at the tail-end of the year, we noted a wider bid-offer spread than usual. Continued liquidity constraints drove tepid trading at the short end of the T-bills market, with yields remaining elevated. Relatively healthy auction rates continues to dampen investors interest in the secondary market as the continue to focus on the primary market (15.00% for the longest dated bill). We expect further interventions from the CBN to keep liquidity tight on Wednesday. In spite of this, we foresee sparks of demand across the FI market as traders begin to take positions in the new year.