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Weekly Market Wrap - 01 March 2019

Bears dominate equity market, ASI declines 212bps w/w                                                  

After a broadly negative week, the Nigerian Bourse gained 34bps today for the second time, leading to a cummulative loss of -212bps w/w. Given the reaction of investors to the election results this week, we highlight the possibility of negative sentiment trickling down into the market next week. That said, we expect bargain hunting to drive positive trading as investors take up undervalued stock leading to a mixed session at week start.                           

Stock Watch: CORNERST is the best perfoming stock on the exchange this week, gaining 19% over three of five sessions. The stock gained 8.70% today to settle at ₦0.25, its highest price since September 2018.           

Yields decline even further as positive trading persists                                                        

The CBN conducted its bi-monthly T-bills PMA on Wednesday, selling its full offer of ₦115 billion across the 91DTM, 182DTM and 364DTM bills at stop rates of 10.90%, 13.01% and 14.37% (Effective rates: 11.20%, 13.91% and 16.77%) – lower than previous auction levels. Meanwhile, the CBN also slowed down frequency of OMO auctions, conducting just one on Thursday and selling ₦1.08 trillion (Offer: ₦400 billion), across the 91DTM, 182DTM and 364DTM bills at stop rates of 11.90%, 13.50% and 14.30% (Effective rates: 12.26%, 14.47% and 16.68%). Notably, whilst stop rates were unchanged on the 91DTM and 182DTM, they moderated significantly (70bps) on the 364DTM bill. Amidst this, the Interbank Call rate declined 250bps w/w to settle at 16.33%. Given the change in frequency of OMO auctions over the past two weeks, we interprete this as a change in CBN’s liquidity stance and expect this trend to continue. That said, we except demand to remain elevated in the Fixed Income market next week even as investor interest strengthens.