Weekly Market Wrap - 8 June 2018
Bears resurface at week close
Bears returned to the NSE at week close as the ASI closed the day under (-96bps) albeit closing in the green for the week (+503bps) supported by stronger earlier gains. It was the first positive w/w close in six weeks, with all but one sector closing in the green for the week. After a week of positive trading, bears resurfaced at week close. We expect profit taking observed today to persist at week open and thus foresee a mildly negative close on Monday.
Stock Watch: DANGSUGAR has gained 21% over the last nine sessions. The stock currently trades at ₦20.00, below our target price of ₦23.30. DANGSUGAR is flat YTD, a favourable performance compared to the 6% YTD decline for the Consumer Goods sector.
Quiet trading session to round up the week
In the absence of any liquidity mop up by the CBN, trading in the T-bills space was relatively flat today. Notably, whilst yield on the 13DTM bill advanced 40bps to settle at 12.53%, yield on the 146DTM bill declined 69bps to settle at 12.73%. However, trading in the bond space was more bearish, with yields on benchmark bonds rising 6bps on average. In particular, yields on the 16.39% FGN JAN 2022 and 12.40% FGN MAR 2036 bonds advanced 22bps and 14bps to close at 13.62% and 13.67% respectively. Overall, t-bill yields rose 3bps w/w on average after a relatively quiet week while yields on benchmark bonds rose 19bps w/w. We expect healthy system liquidity (₦368 billion) to support some positive trading next week, barring any CBN liquidity mop up.
The CBN supported the FX market, infusing $210 million mid-week into multiple segments of the market. Amidst this, the naira depreciated ₦0.06 w/w at the I&E FX Window to close at ₦360.91 and appreciated ₦1.00 w/w in the parallel market to close at ₦361.00 against the dollar. We expect the naira to remain stable across the various windows of the currency space as the CBN continues to intervene in the FX market.
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