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Weekly Market Wrap - 18 May 2018

ASI records third consecutive w/w decline                                                         

After a largely bearish session today (-44bps), the ASI closed the week 134bps in the red, its third consecutive w/w decline. Notably, all key sectors closed lower on the day. With sentiment still largely bearish at week close, we expect the market to open the week on a negative note                                                            

Stock Watch: After a 10-session rally which saw CCNN rise 48% to a five-year high of ₦29.00, trading in the cement manufacturer took a turn, with the stock declining 17% over the past three sessions. The stock currently trades at ₦24.00 and has returned 153% ytd, making it the best performing stock on the exchange.                                                           

Mixed trading persists at week close                                                    

Sentiment this week was largely mixed, with yields declining 37bps on average w/w in the T-bills space and advancing 9bps on average w/w on benchmark bonds. Buy sentiment was prevalent in the T-bills market at week close, with yields moderating 4bps on average. In contrast, trading in the bond market was negative, with yields on benchmark bonds advancing 11bps on average today as sell pressure dominated the space. Ahead of the MPC decision on Tuesday, we expect cautious trading across the Fixed Income market at week open. Also, the DMO will be conducting a bond auction on Wednesday at which ₦70 billion will be offered on the 5-yr, 7-yr and 10-yr bonds.                                                      

The CBN intervened in the Foreign Exchange market, injecting $210 million at week open into various segments of the market. Amidst this, the naira appreciated ₦0.20 w/w at the I&E FX Window and depreciated ₦1.00 in the parallel market to close at ₦360.85 and ₦363.00 against the dollar respectively. 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.