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Weekly Market Wrap - 28 July 2017

Positive earnings spur momentum on NSE                                           

With the roll out of numerous earnings releases swaying investors market sentiment the NSE ASI dropped 102bps at the close of week breaking the 16-session bull run – its longest run since 2001. The bourse still closed the week 8.36% up, lifting ytd gains to 37.17%. Following the release of a slew of H1’17 earnings at week close, we expect further mixed trading at the start of next week albeit amidst strong market activity – today’s turnover totaled ₦8.1 billion. Given market expectation of mostly positive earnings, we anticipate an overall bullish trading tilt in the coming week.                                    

Stock Watch: Despite the better than expected earnings release, DANGCEM lost 387bps , mainly due to profit taking by investors after the stock reached a 3-year high of ₦245.00 on Wednesday. The stock now trades at ₦235.51 (Consensus TP: ₦207.00) and has returned 35.36% ytd.                                 

T-bills market remains bullish amidst liquidity boost                                     

The T-bills market opened the week bullish with yields trending further south in the first two sessions of the weeks. Bears crept in at midweek as persistent CBN mop up pressured system liquidity despite a ₦65 billion OMO maturity. Trading in the bond market was mixed over the week as yields trended in opposite directions despite liquidity injections from a ₦20 billion bond maturity and ₦50 billion coupon on Thursday.                                      

We expect tight liquidity to pressure buying sentiment in the T-bills market at the start of next week. Meanwhile, the CBN will offer ₦229.14 billion at the Primary Market Auction on Wednesday. With tepid trading evident in the bond space during the week following the no change decision by the MPC, we expect this to continue in the coming week.