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Weekly Market Wrap - 31 August 2018

Bearish week rounds off largest m/m decline since May                                                             

Recording the largest value traded since 31 May (₦9.79 billion), negative sentiment drove the equity market further southward at week close, down 68bps. With four out of five sessions in the week closing in negative territory, the ASI closed out August with a 163bps w/w and 586bps m/m decline. The Banking (d/d: -248bps; w/w:-149bps) and Industrial Goods (d/d:-22bps; w/w:-473bps) sectors were under pressure amidst sizable losses in GUARANTY (-400bps w/w), ZENITHBANK( -433bps w/w), and WAPCO (-10.48% w/w). Meanwhile, the Consumer Goods  sector managed a 34bps w/w gain despite a pull back on Friday (-36bps d/d) following losses in NB (-210bps). The Oil and Gas sector (d/d:+10bps; w/w: +97bps) was the only gainer on the day, caping off a positive week for the sector thanks to strong performances from TOTAL (w/w: +681bps) and OANDO (w/w: -600bps).                                                           

Stock Watch: PZ released its FY’18 results today, showing a 3% y/y rise in revenue to ₦80.5 billion, however PAT declined 48% y/y to ₦1.9 billion, 13% below our estimate. The stock is currently trading at ₦21.68, down 27.18% ytd.                                                               

Yields head southwards in FI market                                                     

With the CBN refraining from a liquidity mop up despite a ₦315 billion maturity on Thursday, liquidity improved to ₦720 billion, prompting strong buying on T-bills as yields moderated 24bps (w/w:-3bps). There were notable declines on the 13DTM and 20DTM bills (349bps and 174bps to 9.20% and 9.83% respectively). However, sentiment in the bond space remained bearish as benchmark yields rose 5bps d/d and 25bps w/w. Notable selling was observed on the 14.20% FGN MAR 2024 bond as yield rose 14bps to 14.96%. Overall the T-bills space saw yields decline 3bps w/w whilst the bond space saw a w/w rise of 25bs.                                                                

The CBN continued its intervention in the Foreign Currency market this week, injecting $210 million at the inter-bank foreign exchange. Amid this the naira depreciated ₦0.29 w/w at the I&E FX Window to settle at ₦362.64 against the dollar while depreciating ₦0.50 to ₦359 in the parallel market.