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Weekly Market Wrap - 04 January 2019

2019 off to a weak start; ASI loses 1.28%                                                              

Driven by red closes across all key sectors, the ASI lost 43bps today, taking w/w and YTD returns to -128bps and -252bps respectively. Investor sentiment has been tepid since the start of the year, indicated by weak market turnover and negative closes across counters. In the absence of a market stimulant, we foresee a continuation of investor apathy at the start of trading next week.                           

Stock Watch: WAPCO has been on a downtrend in recent sessions, losing 10% this past week. The stock currently trades at ₦11.30 and is down 9% in 2019.018.                                                     

Primary Market Auctions resume this week                                                      

This week, the CBN mopped up c.₦240 billion (₦520 billion offered) via OMO auctions across three maturities at stop rates of 11.90%, 13.50% and 15.00% respectively. Two special OMO auctions were also conducted, selling c.₦320 billion on the 346DTM and 364DTM bills. Also, the CBN conducted its first Primary Market Auction in 5 weeks, offering and selling c.₦75 billion (c.₦116 billion matured) on the 91DTM, 182DTM and 364DTM bills at stop rates of 10.899%, 13.100% and 14.500% respectively. Following CBN’s monetary stance on liquidity controls, we do not foresee any significant demand in the treasury bills market next week. We also anticipate tepid trading in the bond space given reduced activity this week.                                                                

The Naira depreciated ₦0.85 w/w at the I&E FX Window to settle at ₦365.35 against the dollar and appreciated ₦ 3.00 w/w to settle at ₦359.00 in the parallel market. We expect the naira to remain relatively stable across the various currency windows as the CBN maintains interventions in the FX market.