Weekly Market Wrap - 30 June 2017
From blues to bulls, ASI rises 30% q/q
The Nigerian equity market ended the week in the red (-46bps) as investors locked in gains. Despite this, the ASI was up 310bps this week following w/w gains across all key sectors. Despite the profit-taking observed today, we expect the market to open in the green next week as buying sentiment still persists evidenced by the strong gains recorded in the first two sessions of the week. However, waning volume and value traded suggests a drop in activity which could dampen gains.
Stock Watch: 7UP lost 500bps today following the release of its FY’17 results – revenue up 26%. However, the company made a loss of ₦10.8 billion. The stock currently trades at ₦86.45 and has returned 32.58% ytd.
Improved liquidity buoys fixed income market
Following the liquidity injection at last week’s close and the subsequent OMO maturity of ₦236 billion yesterday, trading remained upbeat through the week in the T-bills market with yields trending southwards across the space, particularly on short dated maturities. On the other hand, trading activity in the bond market was muted for most of the week given that investor interest in the space remained tepid. However at week close given the increase in system liquidity, activity upturned in the bond market with yields moderating across most benchmark bonds. We expect the improvement in system liquidity to continue to spur demand in the fixed income market in the coming week. Also, with the CBN signaling its intention to reduce T-bills rates (with the lower rates seen in recent OMO auctions), we see further room for increased buying activity in the T-bills market particularly.
The CBN continued to support liquidity in the currency market through consistent FX sales. Notably, the apex bank sold $195 million across the different segments of the market on Wednesday. Despite this, the naira depreciated ₦4.28 at the I&E FX window, but appreciated ₦1.50 in the parallel market to close at ₦366.44 and ₦366.00 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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