Weekly Market Wrap - 29 March 2018
NSE ASI rebounds at week close
After four consecutive sessions of losses, the Nigerian equity market rose 172bps today (+8bps w/w), rounding off the holiday-shortened week on a cheery note. Despite today’s positive close, we note that market breadth stayed negative (25 advances, 29 declines) indicating sustained tepid trading sentiment. Thus, we foresee a mixed session at week open, albeit with a positive bias given the resurgence of interest on select large caps.
Stock Watch: FO released its FY’17 results with top line down 13% to ₦129 billion and bottom line up 323% to ₦12 billion – 4% behind and 94% ahead of our expectations respectively. The stock currently trades at a price of ₦42.00 and has declined 3% ytd.
Sticky yields amidst no OMO auction all week
Whilst the CBN refrained from conducting OMO auctions through the week, trading remained mixed across the T-bills market from week-open to mid-week, pressured by tight market liquidity. Supported by maturity inflow (₦189 billion) on Thursday however, demand picked up steam in the T-bills space towards week close. Meanwhile, the bond market was largely quiet in the first three days of the week with an overall bearish bias. Similar to the T-bills market however, demand improved towards week close, spurred by improved liquidity. Nonetheless, yields on benchmark bonds rose 16bps w/w on average. Whilst current system liquidity remains supportive of further demand, we foresee a queit week open as market participants turn cautious ahead of the MPC meeting scheduled for Tuesday and Wenesday. Meanwhile, the CBN is set to conduct a T-bills PMA next week, offering ₦190 billion across the 91DTM, 182DTM and 364DTM bills.
The CBN continued to support liquidity in the currency market through consistent FX sales. Notably, the apex bank sold $210 million across the different segments of the market on Wednesday. Despite this, the naira depreciated ₦0.20 at the I&E FX window, but stayed flat in the parallel market to close at ₦360.20 and ₦361.00 respectively against the dollar. We expect liquidity to further improve as the CBN continues to inject foreign currency into the system.
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