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Weekly Market Wrap - 23 February 2018

Bulls swoop in on beaten down stocks                                                 

For the fourth consecutive session, the Nigerian equity market closed higher, gaining 74bps on gains across all key sectors. Notwithstanding, the All-Share Index still closed in negative territory for the week, down -16bps w/w due to heavier losses at the start of the week.  With market breadth remaining markedly positive and as investors scramble to take positions before the flurry of FY’17 earnings, we foresee another positive session on Monday.                                                 

Stock Watch: PAINTCOM announced that its shareholders have agreed to a Scheme Agreement aimed at delisting the company from the Nigerian Stock Exchange. Under the Scheme, shareholders would be paid a cash consideration of ₦1.15 for every share held. The stock currently trades at ₦0.59 and has remained flat since 10th October 2017.                                                 

Yields dip after a slow week of OMO’s                                                 

Still suffering from tight liquidity, the fixed income market opened the week with a bearish tilt. But with the CBN abstaining from OMO auctions until Thursday (no sale at Monday’s auction), demand resurfaced in the T-bills space. Supported by a ₦29 billion maturity, buying continued through the week – driving yields 40bps lower w/w. Trading in the bond market was also slightly bearish leading to the February Bond Auction on Wednesday. The DMO offered ₦100 billion and sold ₦80 billion across the 5-year (re-opening) and 10-year (new issue) bonds at stop rates of 13.70% and 13.98%.  With liquidity still relatively healthy, we expect positive sentiment to persist in the fixed income space at week open, barring any CBN liquidity mop up.                                  

The CBN sustained its interventions in the currency market, conducting an array of spot and forward sales. Worthy of note is the c.$210 million currency sale on Monday across the different currency windows. Over the week, the naira depreciated ₦0.34 at the I &E FX Window and appreciated ₦1.00 in the parallel market to close at ₦360.70 and ₦360.50 respectively against the dollar. We expect further CBN interventions in the coming week to sustain liquidity in the foreign exchange market.