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Weekly Market Wrap - 22 March 2019

Market posts first positive close in seven sessions                                                         

After recording four negative sessions, the NSE ASI gained 82bps on Friday, erasing this week’s losses to a mere 1bp. The Industrial Goods sector (+172bps) recorded the most gains today, thanks to upticks in CCNN (+450bps) and DANGCEM (+85bps). Similarly, the Banking sector (+137bps) and Consumer Goods sector (+40bps) closed positive after gains in GUARANTY (+373bps), UBA (+130bps), INTBREW (+811bps) and DANGFLOUR (+265bps) outweighed losses in UNITYBNK (-471bps) and PZ (-667%). Finally, the Oil & Gas (-36bps) sector was the sole loser today, following the decline in FO (-107bps). Despite a positive close today, we highlight that the sentiment in the market still remains weak. On the back of this, we expect seesaw trading next week, as the interplay between bargain hunting and sell-offs continues.               

Stock Watch: JBERGER released its FY'18 results today posting topline and bottom line figures of ₦194.6 billion (+37% y/y) and at ₦6.1 billion (+142% y/y) respectively. The stock closed the week at ₦27.50. 

The CBN returns one-year bill to OMO auction                                                 

This week, the CBN mopped up ₦409 billion in two OMO auctions, while also conducting a PMA on Wednesday, where it sold the full offer of ₦49 billion. Significantly, Thursday’s OMO auction saw the return of the long-dated paper, with the 350DTM bill closing at a lowered stop rate of 13.04%, as the CBN mopped up the ₦121 billion OMO maturity. Similarly, stop rates of the 1-year bill at the PMA closed at 12.35%, with stop rates on the other maturities also closing lower than previous PMA levels. Amidst this, the Interbank Call rate declined 208bps w/w to settle at 14.25%. We expect the bond market to start the week quiet, as investors await the MPC announcement on Tuesday and the bond auction scheduled for Wednesday. Also, we expect mild demand in the t-bills market amidst the absence of an OMO auction at week start.                                                          

The Naira depreciated ₦0.25 w/w at the I&E FX Window to settle at ₦360.43 and remained flat w/w at ₦358.50 against the dollar in the parallel market. We expect the naira to remain largely stable across the various windows of the currency space as the CBN maintains interventions in the FX market.