FREE

Weekly Market Wrap - 11 January 2019

ASI logs 264bps loss despite Friday rebound                                            

In spite of a 106bps d/d uptick at week close, the ASI posted a 264bs w/w decline following three consecutive red closes this week. With investor apathy dampening activities this week, we do not think that Friday’s positive close indicates a convincing reversal in trend. Therefore, we anticipate mixed trading at the start of next week, but with a negative tilt.                                               

Stock Watch: Following four straight red closes, FIDELITYBK has gained in the last three consecutive sessions, initially losing 8% before a cumulative gain of 11%. The stock currently trades at ₦2.00, down 1.5% in 2019.                                               

Yields moderate w/w despite CBN mop-ups                                              

This week, the CBN sold c.₦310 billion (₦460 billion offered) in two OMO auctions at stop rates of 11.90%, 13.50% and 15.00% respectively across 3 maturities. The apex bank also sold ₦46 billion at a special OMO on the 364DTM bill. Meanwhile, the Interbank Call rate remained flat at 20.00%. Amidst the mop ups and the consequently constrained system liquidity, trading in the T-bills market was mixed this week, albeit with yields declining 9bps w/w (-5bps d/d). Meanwhile, trading was mostly quiet in the bond space, with yields declining 4bps w/w (-2bps d/d). We anticipate continued mixed trading in the FI space as the CBN maintains its tight monetary stance.                                           

On Tuesday, the CBN injected $210 million into the various foreign exchange windows. Amid This, the Naira appreciated ₦0.41 w/w at the I&E FX Window to settle at ₦364.94 against the dollar and depreciated ₦ 2.00 w/w to settle at ₦361.00 in the parallel market. We expect the naira to remain relatively stable across the various windows of the currency space as the CBN maintains interventions in the FX market.