Weekly Market Wrap - 10 November 2017
Tepid trading persists, market closes up
The Nigerian Stock Market closed 19bps higher today, up 49bps w/w. Market sentiment was notably mixed throughout the week, with sideways trading observed acorss key sectors on the exchange. Given no fundamental newsflow expected in the coming week, we expect varied sentiment to persist, with a slightly bulish tilt at week open.
Stock Watch: Gaining 30% this week, CAVERTON advanced 370bps today. The stock currently trades at a year-high of ₦1.68 and has returned 87% ytd. We note that the company released its 9M’17 results last month, reporting a ₦1.2 billion PAT (9M’16 LAT: ₦1.04 billion).
Ratings downgrade shakes up Fixed Income market
The fixed income market traded mixed at week open amidst sustained OMO auctions from the apex bank. Whilst tepid sentiment dominated the mid-long dated maturities, buying was more noticeable on higher yield short termed maturities. By mid-week however market sentiment was shaken up by news surrounding Moody’s downgrade of Nigeria’s long-term sovereign issuer rating. On the other hand, notable yield moderation was recorded in the T-bills market as investors took shelter on this end of the curve. In line with recent trend of yield moderation across the yield curve, we expect yields to inch lower further in the coming week across the space. Whilst we expect the CBN to persist with its OMO mop ups, we expect the anticipated ₦133 billion OMO maturity scheduled for Thursday to support buying towards the end of the week.
The CBN sustained its consistent interventions through the week, carrying out a spate of currency spot and forward sales. Nonetheless, the naira depreciated ₦0.05 at the official spot market to close at ₦305.95 against the dollar. Meanwhile, the naira appreciated ₦0.17 to settle at ₦360.40 at week close at the I&E FX Window.
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