Weekly Market Wrap - 14 July 2017
Five straight sessions in the green – ASI up 247bps w/w
The Nigerian equity market garnered green closes all through this week. However, profit taking in select stocks pressured the bourse at week close with the market closing relatively flat (+4bps; +247bps w/w). With the earnings season gearing up, we expect investors to turn attention to corporate earnings releases through the week. That said, given that overall market expectation for this Q2’17 earnings season is positive, we foresee a more bullish trading bias through the coming week.
Stock Watch: Investors reacted negatively to alleged news reports that the Securities and Exchange Commission (SEC) is investigating Oando Plc over petitions filed by foreign investors in relation to the company’s shareholding structure. The stock lost 958bps today, currently trades at ₦7.55 and has returned 61% ytd.
T-bills market mixed amidst persistent OMO auctions
The CBN conducted another OMO auction today, offering ₦55 billion across the 195DTM and 363DTM bills. At week close, mixed trading resurfaced in the market with the 20DTM bill declining 56bps whilst the 41DTM bill advanced 66bps to close at 17.15% and 17.91% respectively. The bond market however remained bearish all through the week amidst the monthly bond auction where stop rates closed slightly above secondary market levels. Notably, yield on the 12.1493% NGN JUL 2034 bond advanced 3bps to close at 16.05% today. Amidst pressured system liquidity, we expect trading in the T-bills market to remain mixed. Notably, at the T-bills Primary Market Auction scheduled for next week Wednesday, the CBN will be offering ₦205 billion across 91DTM, 182DTM and 364DTM bills. We also expect tepid trading to continue in the bond space even as tepid investor sentiment persists.
The CBN continued its liquidity injection into the foreign exchange market this week, supplying $142.5 million on Monday into the inter-bank market. With the CBN persisting with its liquidity interventions, we expect the naira to remain strong against the dollar in the near term.
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