Weekly Market Wrap - 27 October 2017
Sideways trading persists as earnings troop in
The Nigerian stock market shed 15bps at week close to bring w/w loss to 34bps. We note that sideways trading persisted today as investors reacted to mixed corporate earnings. We expect this sentiment to filter into next week and anticipate a negative week open even as more corporate earnings are released.
Stock Watch: UACN shed 500bps today after investors reacted negatively to the release of its 9M’17 results. Notably, whilst revenue grew by 21% to ₦69 billion, PAT fell sharply by 55% to ₦2 billion. The stock closed at ₦18.05 and has returned 7% ytd.
Lower stop rates at Bond PMA spur demand
Trading in the T-bills market was mixed for most of the week as the tight system liquidity capped buying activity in the market. Through the week, the CBN mopped up ₦180 billion via OMO auctions on the short & mid dated bills. On Thursday however, there was a ₦94 billion OMO maturity that helped ease liquidity pressures (Interbank Call rate declined from 92% to 17%). With this, moderate buying surfaced at week close in the T-bills space. Nonetheless, T-bills yields advanced 27bps on average w/w. Meanwhile, whilst the bond market started the week on a quiet note, trading turned bullish by mid-week as investors positioned ahead of the monthly bond auction scheduled for Wednesday. Following lower than expected stop rates recorded at the auction (15% on the 5-yr and 10-yr bonds), demand strengthened slightly in the bond space with yields moderating across the space, particularly on the long end of the curve.
On the currency front, the CBN maintained its consistent interventions, conducting a number of FX sales across various windows. Notably, $195 million was sold on Monday across different currency windows. Over the week, the naira appreciated ₦0.01 at the I&E FX Window to close at ₦360.31 and remained flat at ₦361.50 in the parallel market.
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