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Weekly Market Wrap - 29 June 2018

Bulls rescue ASI at week close – up 110bps w/w
After trading negatively for three consecutive days, bulls returned to the equity market at week close, with the ASI closing 144bps higher (+110bps w/w). In spite of today’s positive close, we note that underlying market sentiment remains weak and we expect this to remain dominant in the coming week, thus steering a mixed trading session.

Stock Watch: The NSE is set to carry out its semi-annual review of its indices next week. The companies likely to be included in the NSE 30 are FCMB, OANDO, BETAGLAS, UACN and STERLNBANK whilst DIAMONDBNK, JBERGER, FO, TRANSCORP and DANGFLOUR might exit the index. We expect to see increased activity on these stocks next week as fund managers adjust their positions accordingly. 

Mixed trading persists despite modestly positive liquidity
Despite the absence of a liquidity mop-up today, sentiment in the T-bills space remained mixed – yields advanced 4bps on average. Meanwhile, trading in the bond space turned negative, with yields on benchmark bonds advancing 5bps on average. Overall, the fixed income market traded mixed this past week, with yields on T-bills and benchmark bonds rising 20bps and 24bps w/w on average, respectively. Notwithstanding the improved system liquidity (estimated at c.₦80 billion), we expect mixed trading pattern to persist at weak open, on account of weak investor sentiment.

The CBN continued its regular FX interventions in the FX market, infusing $210 million through multiple windows at week open. Amidst this, the naira depreciated ₦0.32 w/w at the I&E FX Window to close at ₦361.32 against the dollar but appreciated ₦0.50 w/w in the parallel market to settle at ₦360.50. We expect the naira to remain stable across the various windows of the currency space as the CBN continues to intervene in the FX market.