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Weekly Market Wrap - 19 October 2018

Industrials and Banking boost market to positive w/wIndustrials and Banking boost market to positive w/w In an even split between sector gainers and losers, the All-Share Index closed 54bps higher today and +119bps up w/w, the second positive week in a row. Meanwhile, activity levels dropped in today’s session, with market turnover falling to ₦1.5 billion.   Although performance was positive at week close, market breadth stayed negative, with investor sentiment favouring sell-side activity. Therefore, we anticipate a mixed start to next week’s trading. Stock Watch: OKOMUOIL released its 9M’18 results today, with top and bottom line coming in line with our estimates, albeit up 1% and 13% y/y respectively. The stock has returned 18% year-to-date and currently trades at a price of ₦79.80. Market closes negative amid liquidity strain In spite of stretched system liquidity levels following yesterday’s large OMO sale of ₦275 billion (₦350 billion offered), the Interbank Call rate declined 66bps to close at 12.67%. Meanwhile, the DMO released the October bond offer circular, indicating a planned supply of  ₦115 billion (September offer: ₦90 billion) across the 12.75% APR 2023, 13.53% FEB 2025 and 13.98% FEB 2028 FGN bonds. On the back of constrained liquidity following the OMO and PMA auctions, we expect bearish trading in the T-bills space. Following the release of the October bond circular which indicates an increase in bond supply, we foresee yields advancement in the bond space.
The naira appreciated ₦0.20 w/w at the I&E FX Window to settle at ₦364.02 against the dollar and depreciated ₦0.50 to settle at ₦360.50 in the parallel market. We expect the naira to remain stable across the various windows of the currency spaces despite CBN pause on interventions in the FX market.