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Weekly Market Wrap - 28 September 2018

ASI mirrors August performance, sheds 597bps m/m                                                     

"Despite there being more negative sessions than positive (3 to 2) the market closed 70bps up thanks to strong trading earlier in the week. Trading on the bourse closed very marginally in the green at week close amidst an even split between gainers and losers. Despite a mildly negative close on Friday, the Banking sector (w/w: +247bps) was the only key sector to close in the green for the week following rebounds in GUARANTY (w/w: +533bps) and UBA (w/w: +500bps). Despite recording modest upticks on Friday, the Industrial Goods and Oil & Gas sectors lost 136bps w/w and 73bps w/w respectively as investors sold off WAPCO (w/w: -553bps), FO (-674bps) and TOTAL (-353bps). Meanwhile, the Consumer Goods traded mostly in negative territory, shedding 135bps d/d and 51bps w/w no thanks to selloffs in NESTLE (d/d: -227bps) and PZ (d/d: -233bps; w/w: -704bps).We anticipate a tepid start to next week’s trading amidst a shaky market sentiment and low market turnover indicative of sustained weakness in investor participation.                                 

Stock Watch: UBN fell 12% w/w to settle at ₦5.10 at week close. After touching a year high of ₦8.35, the stock has now lost 35% ytd and is one of the poorest performing lower-tier banking stocks on the exchange.                                                        

Mixed trading follows Monetary Policy Committee decision                                                    

"With liquidity remaining healthy at ₦349 billion to close the week, the interbank call rate advanced 200bps to close at 6%. Trading was mixed in the T-bills space as yields closed flat on average on the day (+19bps w/w). Whilst buying was observed on the short-dated bills – the yield on the 41DTM bill moderated 24bps to 12.63%, yields advanced on the longer dated bills, with yield on the 356DTM bill rising 47bps to 15.49%. Meanwhile, trading in the bond space had turned positive following the MPC decision to hold rates on Tuesday and that persisted today with yields down 11bps (-15bps w/w). Buoyed by healthy system liquidity and greater certainty over monetary policy, we expect a slightly positive start to next week’s trading.                                     

The naira depreciated ₦0.24 w/w at the I&E FX Window to settle at ₦363.92 against the dollar while remaining flat 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.