Weekly Market Wrap - 26 May 2017
ASI soars past 29,000 points
Bolstered by gains across most key sectors, the NSE ASI rose 210bps today, sailing past 29,000 points. The Nigerian bourse stretched its gains to four consecutive sessions closing the week 338bps up. With many bellwethers remaining on the bid cart at the close of the market today, buying momentum remains strong on the exchange and we see another green close for the ASI at week open.
Stock Watch: GUARANTY is on a five-session gaining streak, rising 12% over the period. However, the banking giant advanced 500bps today and currently trades at a record high of ₦35.28. We therefore emphasize cautious trading as profit taking could arise. GUARANTY has returned 43% ytd.
Liquidity boost lifts market, yields lower at week close
The fixed income market was mostly mixed at week open as pressured system liquidity weighed on trading. At market close on Tuesday, the Monetary Policy Committee (MPC) of the CBN announced its decision to hold all monetary policy levers at previous levels. This was largely in line with market expectation. However, the MPC showed a slight hawkish leaning, citing stubborn inflation and the CBN Governor reiterated the usefulness of regular liquidity mop ups for this purpose. Following this, the market turned slightly bearish with yields rising across the curve. The market however turned bullish towards week close as inflow from OMO maturity supported liquidity. Barring mop ups at week open, we expect the improved system liquidity to support demand.
The CBN sustained its consistent interventions in the currency market, conducting an array of spot and forward sales. At market close on Tuesday, the CBN Governor reiterated the bank’s willingness to sustain foreign currency injections in an effort to boost liquidity. Over the week, the naira appreciated ₦1.92 at the NAFEX window to close at ₦379.69 against the dollar. However the naira depreciated ₦2.00 in the parallel market to close at ₦379.50 against the greenback. We expect CBN interventions to continue to sustain liquidity in the foreign exchange market.
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