Weekly Market Wrap - 13 July 2018

Bulls emerge at week close
Bulls emerged on the bourse today, helping all key sectors to green closes, as the ASI inched 45bps higher. Despite this, prior losses led the ASI to a 62bps w/w loss. The Industrial Goods sector (+329bps d/d; -129bps w/w) was today’s best performer, spurred by an 870bps advance in WAPCO. Also, the Oil & Gas sector posted a 71bps uptick for the day and on the week after SEPLAT (+236bps) lifted the sector, and despite declines in ETERNA (-588bps) and FO (-430bps). The Consumer Goods (+54bps d/d; -43bps w/w) and Banking (+40bps d/d; -210bps w/w) sectors also closed up, buoyed by strong showings in DANGSUGAR (+294bps), NESTLE (+180bps), UBN (+345bps) and ACCESS (+149bps) which overshadowed losses in NB (-18bps) and ETI (-73bps).
After a largely bearish week, bargain hunting supported the market to a positive close at week close. However, we note that sentiment remained weak – evidenced by still negative market breadth. Hence, we foresee tepid performance for the market at week open.

Stock Watch: TRANSCORP has declined 14% over the last twelve sessions, dipping 160bps today. The stock currently trades at a year-low of ₦1.23 and has declined 16% YTD.

Yields head south on Friday and for the week
Buying returned to the fixed income market today in the absence of CBN liquidity mop up, with yields on T-bills moderating 22bps on average. Most notably, yields on the 41DTM, 97DTM, and 181DTM bills moderated 109bps, 60bps, and 29bps to settle at 11.02%, 10.97%, and 12.58% respectively. Trading on bonds was likewise positive, particularly on the short to mid dates tenors. Specifically, yields on the 16.00% FGN JUN 2019 bond and 15.54% FGN FEB 2020 bonds dropped 10bps and 27bps to settle at 13.31% and 13.52% respectively. Overall, average yields dipped w/w – 21bps across T-bills and 5bps in benchmark bonds.

Buying should persist at week open in the expected absence of liquidity mop ups, with activity likely concentrated on T-bills.

The CBN infused $210 million into various market segments of the FX market at week open. Amidst this, the naira appreciated ₦1.42 w/w at the I&E FX Window to close at ₦361.16 against the dollar but remained flat w/w at ₦359.50 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.