Weekly Market Wrap - 23 March 2018
Consumer Goods sector drags NSE ASI lower
The Nigerian equity market rounded off the week on a negative note, losing 39bps today (-111bps w/w) to further trim ytd returns to 8.4%. Notwithstanding today’s reversal, we highlight that market sentiment remained much better than earlier sessions in the week, even as market breadth remained positive (33 advances vs 24 declines). Consequently, we foresee a turnaround at the start of the coming week even as renewed appetite for banking stocks remain strong.
Stock Watch: UBA released its FY’17 results with top and bottom line up 20% to ₦462 billion and 9% to ₦79 billion - coming in line with our expectations. The Group proposed a final dividend of ₦0.65 (2016: ₦0.55; Vetiva: ₦0.65). The stock currently trades at a price of ₦11.50 and has returned 12% ytd.
Mixed trading trails fixed income market
The CBN opened the week with an OMO auction announcement, selling ₦116 billion on the 100DTM and 226DTM maturities. Notwithstanding the pressure on liquidity, buy sentiment was observed in the T-bills market with sizeable yield declines across the space. At Wednesday's T-bills auction, the CBN offered and sold c.₦54 billion across the 91DTM, 181DTM and 364DTM at 11.95%, 13.00% and 13.15% respectively – all at rates lower than the previous auction and market levels. On the other hand, trading in the bond market was largely bearish over the course of the week. With system liquidity put at c.₦77 billion at week close, we anticipate another OMO mop up by the CBN at week open. We expect this to cap buying momentum in the fixed income market.
On the currency front, the CBN continued its interventions, injecting $210 million across various segments of the inter-bank foreign exchange market. Following this, the naira appreciated ₦0.50 and ₦0.57 to close at ₦360.00 and ₦361.00 at the parallel market and I&E FX Window respectively. We expect the CBN continues to inject foreign currency into the market – supporting market liquidity.
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