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Weekly Market Wrap - 14 June 2018

Bears hold sway to close out shortened week                                                  

Negative trading persisted at week close as the ASI ended the day in the red (-26bps) albeit closing the week 67bps higher on the back of earlier gains. Trading was mixed this week as profit-taking at week close followed relatively strong gains earlier in the week. We foresee bargain hunting at week open as investors swoop on slightly beaten down stocks.                                                                                                                                                                                                                                                                        

Stock Watch: Dubai based Abraaj Group, recently filed for liquidation due to financial strains. The Private Equity firm recently invested in CILEASING, CUSTODIAN and CWG. The stocks have returned 34%, 35% and 0% YTD respectively.                                                                 

OMO maturity supports healthy buying at week close                                                  

The CBN refrained from conducting an OMO auction today despite a ₦244 billion OMO maturity, and this spurred buying in the T-bills space with yields declining 12bps on average. Notably, yields on the 21DTM and 182DTM bills declined 95bps and 81bps to settle at 11.99% and 11.83% respectively. However, trading in the bond space was more quiet with demand weighted on the shorter-dated bonds. In particular, yield on the 16.00% FGN JUN 2019 bond declined 13bps to settle at 11.91%. Overall, the fixed income market was relatively bullish, with yields on T-bills and benchmark bonds moderating 26bps w/w and 7bps on average, respectively. We expect today’s liquidity inflows to support some buying at the start of next week, barring any liquidity mop up by the CBN.                                                             

The CBN intervened in the FX market, injecting $210 million mid-week into multiple segments of the market. Amidst this, the naira depreciated ₦0.16 w/w at the I&E FX Window to close at ₦361.07 against the dollar and remained flat w/w in the parallel market at ₦361.00. We expect the naira to remain stable across the various windows of the currency space as the CBN continues to intervene in the FX market.