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Weekly Market Wrap - 12 January 2018

NSE ASI loses 33bps as bullish sentiment slows down NSE ASI loses 33bps as bullish sentiment slows down Despite a sharp reversal in the positive trend on Friday as the NSE ASI lost 33bps, strong closes earlier on in the week led to a 10.21% gain w/w. Notably, all sectors closed in the green w/w. With the market turning negative towards the end of the session on Friday, we foresee mixed trading at week open as profit taking offset residual buying sentiment. Stock Watch: HONYFLOUR was the top gainer this week – up 40% and also the best performing non-banking stock this year. The stock currently trades at ₦3.52 and has returned 60.0% ytd. Liquidity strain ensures tepid trading in FI market Trading in the T-bills market was mixed through the week as tight system liquidity constrained buying. Meanwhile, after a relatively bullish start to the week, activity cooled in the bond market in the absence of a Q1’18 bond calendar. Buying resurfaced slightly at week close as strong offshore demand helped drive yields on benchmark FGN bonds 35bps lower w/w. Whilst we foresee modest demand at week open as investors continue to lock in rates, we expect inflation figure due on Tuesday to dictate market sentiment for the rest of the week. We are cautious on the release of the Q1’18 bond calendar but expect lower bond supply in the near term in line with the FG borrowing strategy. Thus, we expect bond yields to continue southwards.  
On the currency front, the CBN sustained its consistent interventions across various FX windows. Over the week, the naira appreciated ₦0.90 and ₦0.15 at the I&E FX and CBN windows to close at ₦360.41 and ₦305.80 against the dollar. We expect sustained liquidity in the currency market as the CBN persists with its foreign currency injections