Weekly Market Wrap - 13 April 2018
NSE ASI records highest w/w gain in four weeks
The Nigerian equity market rounded off the week on a mildly positive note, gaining 29bps today, thus bringing the bourse to its highest w/w gain in four weeks (+21bps w/w) and ytd returns to 7%. With green closes across all but one key sector and strong positive market breadth at week close, we expect today’s upbeat sentiment to filter into the start of next week even as participants begin to price in expectations for Q1’18 earnings releases.
Stock Watch: After 11 sessions of no price movements, SEPLAT gained 499bps today. We believe this uptick was driven by announcement of an interim dividend consideration by the Board of directors – deviating from historical trend – and amidst news of the company’s addition to the Nigerian Stock Exchange Premium Board. The stock currently trades at a price of ₦698.30, below Vetiva’s target price of ₦973.68 and has returned 12% ytd.
Buoyant liquidity drives yields southward
Following the notable reduction in stop rates at Thursday’s OMO auction as well as buoyant system liquidity, the T-bills space turned bullish at week close with yields declining 27bps across the curve. Also, bulls retained the upper hand in the bond market, with yields on benchmark notes moderating 15bps on average. Overall, trading in the fixed income market was notably bullish through the week as yields declined 63bps and 28bps on average in the T-bills and bond markets respectively. Supported by healthy system liquidity and assuming the CBN continues with the recent trend of conducting OMOs strictly to counteract liquidity inflows, we believe positive trading sentiment will persist in the fixed income market 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 depreciated ₦0.31 and ₦0.50 w/w in the I&E FX Window and parallel market to close at ₦360.32 and ₦361.50 respectively. Supported by the apex bank’s regular interventions, we expect the naira to remain stable across the various windows as liquidity remains stable.
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