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Weekly Market Wrap - 08 February 2019

ASI maintains gaining streak, up 292bps w/w                                                    

Following five consecutive sessions in positive territory, the NSE ASI gained 2.92% w/w, following a 31bps d/d uptick at week close. Positive market performance in the market has been driven by bargain hunters with increased activity from both local and foreign players. We expect the positive trend to persist amid sustained interest on select stocks even as investors position to take advantage of a possible post-election rally.                                                      

Stock Watch: DANGFLOUR is the second best performing stock this week, gaining 18% in four out of five sessions. The stock gained 8% today to close at ₦6.85, trading at its highest price since March 2018.            

Offshore investors drive bullish bond market                                                   

The CBN retained its tight monetary stance this week, notably selling ₦644 billion (₦550 billion offered) in four OMO auctions this week, even as a ₦315 billion OMO maturity also hit the system. Nonetheless, the Interbank Call rate declined 334bps w/w to 18.67%. Notably, market intelligence credits the surge in demand in bonds to increased participation from foreign investors, even as FPI proportion of I&E FX window flows have increased from previous months.  Whilst we anticipate continued interest in the bond market amidst a resurgence in FPI inflows, we foresee sustained tepid trading in the T-bills market as the CBN maintains pressure on liquidity.                                                

The Naira appreciated ₦0.98 w/w at the I&E FX Window to settle at ₦361.73 against the dollar and appreciated ₦3.00 w/w to settle at ₦359.50 in the parallel market.  We expect the naira to remain largely stable across the various windows of the currency space as the CBN maintains interventions in the FX market.