Weekly Market Wrap - 20 October 2017
Positive results fail to spur momentum on Nigerian bourse
Despite a series of positive earnings releases through the week, the Nigerian bourse shed 71bps w/w, recording its first negative weekly close in the month. Amidst still-cagey market sentiment, we expect stronger activity next week as earnings season hits full flow. From this, we foresee a mildly bullish trading pattern as earnings are generally expected to be positive.
Stock Watch: CCNN released its 9M’17 results today, with PAT rising by 182% to ₦2.0 billion – 68% above Vetiva estimate. The stock rose 506bps today to close at ₦10.17, above consensus target price of ₦6.99 and has returned 103% ytd.
UNILEVER also released its 9M’17 results towards the close of market today, showing a jump in PAT from ₦1.6 billion to ₦4.8 billion – 7% below Vetiva estimate. The stock currently trades at ₦44.00, above consensus target price of ₦30.48 and has returned 26% ytd.
Bears dominate T-bills space as tight system liquidity bites
The T-bills market opened the week with bearish sentiment amidst a ₦40 billion OMO Auction on Monday. Despite lower stop rates at Wednesday’s Primary Market Auction, as well as an OMO maturity of ₦76 billion on Thursday, the negative sentiment was sustained throughout the week as the CBN continued to restrain liquidity with a total of c.₦345 billion mopped up. As such, yields in the T-bills space advanced 85bps w/w on average. In the bond market, whilst bearish activity dominated the first two trading sessions of the week, sentiment quickly turned bullish by mid-week and buying sentiment garnered as investors cautiously positioned in anticipation of further moderation in rates.
On the currency front, the CBN continued its interventions, injecting $195 million across various windows of the inter-bank foreign exchange market. Following this, the naira depreciated ₦0.11 to close at ₦360.32 at the I&E FX Window, but stayed flat in the parallel market at ₦361.50 against the dollar.
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