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Weekly Market Wrap - 15 December 2017

Tides turn for Nigerian Equity Market at week close
Lifted by heavyweight DANGCEM (+435bps), the Nigerian equity market eked out a 132bps gain today, despite bearish sentiment across the rest of the market. However, earlier losses ensured that the ASI closed 209bps lower w/w. Notwithstanding the green close today, market sentiment remains tepid – indicated by negative market breadth as well as notable losses across several stocks. Consequently, we foresee further bearish trading at week open.

Stock Watch: ACCESS has lost 10% over the last six sessions. The stock currently trades at ₦10.40, above Vetiva’s target price of ₦9.46, and has returned 77% ytd.

F.I investors in positive spirits as CBN pauses OMO auctions
With the CBN sustaining its suspension of daily OMO auctions, the fixed income market was in positive spirits through the week. Further supporting upbeat sentiment was the CBN’s announcement to redeem all maturing PMA T-bills till the end of the year, using proceeds from the $3 billion Eurobond issue. The DMO sold ₦78 billion (Offer: ₦100 billion) across the 5-year and 10-year bonds at respective levels of 13.19% and 13.28%, markedly lower than respective rates of 14.79% and 14.80% at the previous auction. Given market expectation of a continued halt in daily mop ups by the CBN as well as anticipation of lower rates in the longer term, we expect a positive start to the week in the fixed income space, further supported by healthy system liquidity.

The CBN continued to support foreign currency liquidity through interventions in the FX market. Notably, the apex bank injected $210 million into the interbank market, earmarking $100 million for the wholesale market, $55 million for SMEs & individuals and $55 million for school and medical fees. We expect the CBN to continue to intervene in the currency market and thus expect liquidity to remain at current levels.