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Weekly Market Wrap - 30 November 2017

Shortened trading week ends in the green                                                        

Despite a negative open to the week, the ASI recorded a 155bps w/w rise following notable buying interest across all key sectors on the stock exchange. With positive closes across all but one key sectors and consistently strong positive market breadth to close out the shortened week, we expect this upbeat sentiment to filter into the start of next week.                                                  

Stock Watch: DANGFLOUR has gained 12% over the last four sessions and currently trades at a year-high of ₦10.30, returning 142% ytd.                                                       

Sentiment wanes in FI market at week close                                                     

Amidst constrained liquidity, the T-bills market opened the week with a slightly bearish bias. The sentiment however turned slightly upbeat going into mid-week, with the CBN conducting a T-bills Primary Market Auction where it sold c.₦117 billion across the 91DTM, 182DTM and 364DTM bills at stop rates of 13.95%, 15.00% and 15.57% (effective yield: 13.38%, 16.21% and 18.43%). Whilst we had expected the ₦132 billion OMO maturity to further support buying at week close, sentiment in the T-bills market turned flat for the day - with yields advancing 22bps on average w/w. Meanwhile, the bond market traded mixed with a downbeat bias for most of the week as strained system liquidity kept investors majorly on the sell side. At week close, sell sentiment further filtered through all ends of the bond space with yields on benchmark bonds advancing 14bps on average w/w. Supported by the liquidity inflow at week close, we believe a more positive trading sentiment will surface in the fixed income market at week open. We expect the bond market to be supported by anticipated FAAC payments scheduled to hit the system at the start of the week.                                                               

The CBN continued its liquidity injections into the Foreign Exchange Market at week open, selling $210m in various segments of the market. Amidst this, the naira depreciated ₦0.40 w/w at the I&E FX Window to close at ₦360.65 whilst remaining flat in at ₦362.50 in the parallel market. We expect further CBN interventions in the coming week to sustain liquidity in the foreign exchange market.