Weekly Market Wrap - 06 April 2018
Nigeria bourse closes week with mild 8bps loss
The Nigerian equity market rounded off the week on a mixed note, losing 8bps today (-160bps w/w) to further trim ytd returns to 6.8%. Notwithstanding the negative close for the week, we highlight that market sentiment was more upbeat at week close and as such we foresee further mixed trading with a mild positive tilt at week open.
Stock Watch: Leading the loser’s table, JAPAUOLOIL shed 24% this week. We note that this mirrors the performance in UNITYBANK – down 17%. We believe this might be related to the negative sentiment surrounding the firm’s affiliation with Milost Global Inc. The stock currently trades at a price of ₦0.45 and has lost 10% ytd.
Lengthy OMO pause drive yields southward
With the CBN refraining from liquidity mop ups, the T-bills market began the week on a bullish note. Buying strengthened at midweek as stop rates at Wednesday’s PMA (₦95 billion offered and sold) came in lower than previous PMA and secondary market levels. However, despite a ₦434 billion T-bills inflow, demand cooled on Thursday as the CBN returned to mop up ₦749 billion, albeit at slightly lower stop rates (Short end: 12.50%, Mid-space: 14.30%) than previous auctions (Short end:12.60%, Mid-space:14.40%). Mixed trading persisted at week close. Demand was similarly healthy in the bond space at the start of the week amidst an unchanged Monetary Policy Committee decision. Buying waned on Thursday as liquidity tightened and the market closed mixed at week close. Thursday’s mop up indicates the CBN’s intention to maintain its grip on system liquidity and we expect this stance to cap buying at week open.
The CBN continued to intervene in the Foreign Exchange market, notably selling $210m at week open across various segments of the market. With this, the naira appreciated ₦0.19 w/w in the I&E FX Window to close at ₦360.01 but stayed flat in the parallel market at ₦361.00. We expect further CBN interventions in the coming week to sustain liquidity in the foreign exchange market.
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