Weekly Market Wrap - 20 April 2018
Choppy trading week ends in the red
The Nigerian equity market rounded off the week on a negative note, shedding 14bps today to extend the week’s loss to 28bps. Market sentiment appears lukewarm given the mixed closes across key sectors and sustained negative market breadth, even as the ASI traded lower for most part of today’s session. We expect this to drive the market to weak start in the week ahead.
Stock Watch: UNILEVER released its Q1’18 results yesterday reporting Revenue of ₦26 billion (+16% y/y) and PAT of ₦3 billion (+81% y/y) - coming in 4% and 23% ahead of our estimates respectively. The stock shed 364bps today to close at ₦53.00, higher than our target of ₦34.15. UNILEVER has gained 29% year-to-date.
Yields continue downwards amidst healthy liquidity
Trading in the fixed income market was significantly positive through the week as yields declined 248bps and 62bps on average in the T-bills and bond markets respectively. With the large reduction in stop rates at Wednesday’s PMA, lower stop rates at yesterday’s OMO auction as well as healthy system liquidity, sentiment in the T-bills space remained bullish today with yields declining 50bps across the curve. Trading also remained positive in the bond market in today’s session with yiields on benchmark bonds moderating 4bps on average. With significantly buoyant system liquidity and the CBN’s less aggressive stance on conducting OMOs, we foresee a positive trading session at the start of the coming week.
The CBN continued to intervene in the Foreign Exchange market, notably selling $210 million at week open across various segments of the market. With this, the naira depreciated ₦0.10 w/w at the I&E FX Window to close at ₦360.42 while remaining flat in the parallel market at ₦361.50. We expect the naira to remain stable across the various windows as liquidity remains healthy with the CBN’s continued interventions in the FX market.
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