Weekly Market Wrap - 26 October 2018
Market ends in the green despite see-saw trading week
The NSE ASI closed out the week with a solid performance, climbing 111bps on the day to close the week 20bps up. The Industrial Goods sector (d/d: +264bps; w/w: -406bps) was the big winner on the day as gains in DANGCEM (d/d: +524bps; w/w: +998bps) outweighed a loss in WAPCO (d/d: -188bps; w/w: -13.10%). Meanwhile, the Banking (d/d: +106bps) and Oil & Gas (d/d: +62bps) sectors recorded strong gains after GUARANTY (d/d: +137bps; w/w: +54bps), UBN (d/d: +137bps; w/w: +54bps) and OANDO (d/d: +490bps; w/w: +288bps) all closed the week positive. As the sole loser on the day, the Consumer Goods sector moderated 199bps (w/w: -97bps) following losses in NB (d/d:-486bps: w/w:-56bps), INTBREW (w/w:-313bps), UNILEVER (w/w: -205bps). With investors continuing to monitor earnings releases, sentiment was varied through the week though supported by strong gains at week close. We expect further releases to sustain current activity levels in the market, however with sentiment still mixed across board.
Stock Watch: NB released its 9M’18 result yesterday, reporting a 38% decline in PAT to ₦14.8 billion and a Q3’18 standalone loss after tax of ₦3.6 billion. The company’s stock fell 486bps in today’s session to settle at ₦88, a 35% YTD loss.
Higher auction stop rates drive bearish market
The DMO and CBN conducted bond and OMO auctions on Wednesday and Thursday respectively with stop rates closing higher than previous auction levels. System liquidity stood at c.₦240 billion at week close. Amidst this, the interbank call rate declined 234bps to close at 10.33%. Trading persisted bearish in the T-bills space during the week as yields advanced 18bps on average w/w. Similarly, the bond space was negative with benchmark yields advancing 7bps w/w. Following higher stop rates at the OMO and bond auctions this week, we anticipate bearish trading to start the week. Whilst we expect broadly negative investor sentiment in the treasury bills market, we foresee milder yield advancement on bonds given market anticipation of reduced domestic government borrowing.
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