Weekly Market Wrap - 31 August 2017
ASI caps bearish week with 35bps loss
Notwithstanding a surge in market turnover as well as the positive turnaround in market breadth, the NSE ASI wrapped up the largely bearish week with a 35bps loss today. The ASI closed 312bps lower over the shortened trading week. Despite the positive market breadth today and the buying interest seen on select blue-chip stocks, we note that sell sentiment in the market still dominated – indicated by today’s negative close. As trading resumes after the holiday on Tuesday, we expect to see more mixed trading in the market but still with a slight bearish bias.
Stock Watch: Despite release of impressive H1’17 results (PAT up 56% y/y and 10% ahead of Vetiva estimate), UBA shares have been on a consistent downtrend in recent times. The stock lost 6% in the last six sessions and currently trades at N9.10. Nonetheless, the tier I bank has outperformed, returning 102% ytd vs. 60% for the NSE Banking Index.
Buoyant liquidity spurs positive close for FI Market
Amidst constrained liquidity, the T-bills market opened the week on a mixed note with a mild bullish bias. Following a ₦101 billion maturity at week close however, the T-bills market ended the shortened trading week on a positive note with yields declining 16bps on average. Supported by modest improvement in system liquidity at week close, we expect yields to trend further southwards in the T-bills market at week open. However, we maintain that consistent mop-ups from the CBN would cap demand in the space. The bond market is however expected to remain mixed, with interest still skewed towards the shorter dated bonds.
The CBN continued its liquidity injections into the Foreign Exchange Market at week open, selling $250m in three segments of the market. Amidst this, the naira appreciated ₦5.00 w/w in the parallel market to close at ₦363.50 whilst remaining flat in the I&E FX Window at ₦359.67.
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